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Hugo Thorman

Hugo Thorman believes wrap has barely scratched the surface of its full potential and reckons the market could amount to a staggering £2trillion.

Thorman, the chief executive of Ascentric, is aiming for funds under administration of £10bn in less than five years but says this could be dwarfed by a possible eventual figure of £100bn. “If you believe there are £3.8trn of financial assets out there, then certainly £2trn of those are wrapable. The current market is only £100bn, so you can see it is less than 5 per cent of the available market. If there were £2trn, it is quite easy to see how any one player could have £100bn,” he says.

He believes this huge potential for the wrap market will continue to attract new entrants. “There are some people who say there cannot be any more entrants because the market already has too many players. How can that be? It would take 20 players each with £100bn to cover £2trn of assets.

“The life companies already have £1.5trn and people believe that over time those assets will come on to platforms. Then there are stockmarket assets and cash held in banks – all of that will go on to platforms. Then there are funds, which is where we started.”

He does not agree with the view that the market will consolidate to three or four big players and says this belief is partly due to the big players trying to hold on to market share.

Instead, he says the market will continue to evolve, with new entrants continuing to emerge, attracted by the market potential, with consolidation occurring as some businesses get it right and some get it wrong.

“There will be new entrants that will be as big as we are, if not bigger, who will be bigger than the current big players. People boast of having £15m but this is nothing compared with what will happen.”

Thorman was born in Germany and spent his early years between there and Denmark as his father, who was in the army, moved between posts. “I had nannies who taught me both German and Danish, so I was sort of multi-lingual by the time I was five but not much of it was retained.

His family returned to the UK when he was six and, after complete school, he studied economics at university before joining Unilever as a graduate trainee.

His then moved into heavy plant machinery business H Leverton, which he describes as “not very different from a car dealership, just a bit bigger” but after 10 years, it entered a downturn. “The Far East, Korean and Japanese manufacturers were beginning to dominate and I decided this was not something I wanted to continue to do.”

Thorman was offered a place to study for an MBA at Wharton Business School in Pennsylvania and the London Business School. The pound was weak against the dollar so it came down to a financial decision. “My degree in the US was going to cost a small fortune, so I accepted the place in London.”

After getting his MBA, he was faced with a choice of potential employers. With offers of a senior marketing position at Mars Electronics or as assistant strategy director at Abbey Life, the extra responsibility on offer from Abbey tipped the scale.

“I think it was the opportunity to influence the board at Abbey, which at the time was a FTSE 100 company. I was going to lead the strategic group so I accepted that position.”

He recalls his seven years with Abbey Life as an exciting time as direct salesforces were coming under pressure. He says the company decided that bancassurance was looking like the future and it became Lloyds Abbey Life.

“For good or ill, we identified that bancassurance was going to be very big in financial services. As a result, Lloyds Abbey Life was created. It was a merger of Abbey Life and the non-core businesses of Lloyds Bank and became one of first bancassurers in 1989.”

After a stint at Black Horse Financial Services, he left to go into consultancy, both independently and with Watson Wyatt, but was then tempted by an offer at Abbey National.

Thorman was heading the bancassurance business but says he became more interested in the James Hay arm as he could see the opportunities for self-invested personal pensions. “I kept on lobbying for a move to James Hay which I eventually achieved as a reward for my bancassurance efforts.”

He became chairman and chief executive of the James Hay businesses in 2001 and it was shortly after this that he had his first exposure to wrap. “It did not take long in the Sipp business before the idea of wrap came to the fore.” He says he had to sell the idea to the Abbey board which was not the easiest of tasks as it involved investing a lot of money and this was made even harder by the fact that the Abbey retail banking business and life company were both having difficulties but he got the funding and the Abbey wrap was launched.

“We launched the Abbey wrap in 2003 and in about 2004 I got the idea that I ought to have a crack at this myself.”

Around a year later, Thorman met the team at Investment Sciences, the company behind the system on which Ascentric runs. He became managing director in 2005 and by October the business had bought FundsDirect, the parent company of what was to become the Ascentric wrap.

Thorman says the technology at the heart of FundsDirect was developed as a stockbroking system rather than a bespoke wrap system but says it work just as well as a wrap.

“The only difference is that a stockbroker does a lot of stocks and a few funds while a wrap does a lot of funds but a few stocks and shares. They still manage cash, funds and equities.”

The advantages of not having to develop a new system was not just the cost savin but also the element of risk. They knew the system worked.

“Amex failed about that time and AMP had struggled and there was a feeling that this was not easy. I knew how difficult it was from my time at Abbey.”

The company’s growth has been fast. When it bought FundsDirect, there was £35m under administration and this total has now grown to over £600m. It has 90 IFA firms signed up, with around 350 RIs using the system and Thorman expects funds under administration to continue to grow at a similar pace as only half the IFAs signed up have started transferring funds on to the platform.

Last October saw a change of ownership, with Royal London Group buying a majority stake in the business. Thorman says it has been a benign but positive influence, forcing the Ascentric management to adopt the business disciplines of a big company earlier than they might otherwise have done.

“In terms of the ability to grow quickly and the robustness of the platform, it has helped fantastically.”

Born: Hanover, Germany

Lives: West London

Education: King’s Bruton; BA economics at Nottingham University; MBA at London Business School

Career: 2004-present – chief executive officer at FundsDirect and Ascentric wrap; 1997-2004 – Abbey National, including chief executive officer at James Hay and marketing director at Abbey for Intermediaries; 1994-97 – consultancy, including at Watson Wyatt; 1987-94 – strategy director at Abbey Life and Lloyds Bank, marketing director at Black Horse Financial Services; 1985-87 – MBA at London Business School; 1975-85 – various roles in the construction and agricultural equipment industry

Likes: My daughter and my son, a pint of Black Sheep or similar

Dislikes: The nanny state, people who do not do what they say they will do

Drives: BMW 330ci

Favourite books: The Harry Potter series by JK Rowling

Favourite film: American Beauty

Favourite album: Hopes and Fears by Keane

Career ambition: To turn FundsDirect into the most successful investment administration business in the UK

If I wasn’t doing this I would be…A landscape architect, not just designing big projects but also driving the diggers

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