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Macquarie to shut UK wrap platform and Veracity

Macquarie is closing its UK wrap platform and adviser support service Veracity.

Staff at the group were informed yesterday and a consultation has been launched to decide on any job losses, with the group saying they will receive “all of the support they require”.

Veracity provided a business transformation service for adviser firms to become RDR-compliant and was launched in October 2009 by John Baxter [pictured].

A Macquarie spokesperson says: “The Macquarie Banking and Financial Services Group has announced that, due to a combination of execution challenges and difficult business conditions, it does not see a long term future for its wrap platform in the UK, or for the Veracity business as part of Macquarie.

“Macquarie’s businesses are built on superior service and execution, which have been important factors in our success elsewhere in the world. Therefore not meeting these expectations within any business is not a satisfactory outcome.”

“We will spend the next few months supporting the small number of financial planners and clients who use the platform to facilitate a seamless transfer of investments to other providers.”

In July 2009 Macquarie took a 20 per cent stake in Paradigm Norton. Chief executive Barry Horner says he met with Macquarie yesterday and the group reassured that it would not be selling its stake.

Horner says: “We are disappointed on the wrap side, but on the investment side they are very supportive and there is no change to what they are doing.”

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Comments

There are 17 comments at the moment, we would love to hear your opinion too.

  1. They enter with a fanfare and leave with their tail between their legs. How many more will go the same way.

    There is only so much business to go round in the UK and there are probably enough players already in this space.

    I feel sorry for the advisors that have to go through all the administration once again and explain to clients why they chose the wrong platform.

  2. You must be joking 17th November 2010 at 11:15 am

    This, in my opinion, will be the first of many!

    I’d expect similar news from Nucleus, Transact, Ascentric, Novia, AdviserChoice et al…

    In all honesty, I hope this isn’t the case as I think competition is vital in a free market… unfortunately it has been a number of years since the UK had a free market!

    All my humble opinion of course, but this may well put into question many IFAs due dilligence of platforms/wraps…

    The first question should always be…’Do you have the reserves, cashflow and profitablility to be able to fund any major changes the FSA may make to your business model?’

  3. Just goes to show the importance of due diligence in selecting a Wrap provider that is committed and resourced to be a long term player in this market. Pity the poor few who now have to reregister to another provider. What a waste of time and resources

  4. YMBJ – I know we’ve enjoyed a few robust exchanges in the past but you might want to be slightly more careful about what you say. Always happy to share details of Nucleus’ finances if anyone wishes to know more.

  5. It has always been “transparently” obvious that the small added value operations would have a hard time. The public by and large prefer lower cost to activity for its own sake services. There is a market segment that ways these “services” and
    is willing to pay but the segment is not large enough to support all those currently competing.

    Now that there is no requirement to unbundle I would expect to see more go the same way.

  6. “I feel sorry for the advisors that have to go through all the administration once again and explain to clients why they chose the wrong platform.”

    Only for the advisors who have a robust DD process, those who don’t may spin a line to cover what they sit on.

    YMBJ do you have next weeks lottery numbers?

  7. The article does not clearly identify the core reasons for the closure other than “due to a combination of execution challenges and difficult business conditions”.

    This would indicate a failure to deliver a service that meets market expectation and winning sufficient new business are the cause.

    Neither of these are to do with capital and reserves.

    The second reason given is particularly puzzling as the size of the potential Wrap and Platform market is estimated at £1.8 trillion of assets and so far all platforms combined total just over 100Bn.

    This leaves a huge potential market still available as the Wrap and Platform development in the UK is still in its early stages. So there is more than enough business to go round.

    I would guess “execution challenges” is the key clue in this case as this would indicate a failure to deliver despite a high expenditure to rectify and hence reduced business volumes.

    Time and time again it has been proved that large reserves inducing vast expenditure are not a recipe for success. Witness AMEX, Lifetime, and now Macquarie (not to mention many expensive false starts by other providers).

    In fact good business management, good systems and delivering a service that meets market expectation are what are essential.

  8. Spot on Mick!

  9. Sad news, as there are some good people involved in Macquarie, both staff and IFA supporterss. I think increasingly advisers will look at ‘commitment to the UK’ when selecting a platform as capital, profitability etc. all help but without some skin in the game it makes exiting the UK market a little too easy. There are plenty of platform providers who have no choice but to continue with a platform strategy and they may well pick up more business of the back of this news.

  10. You must be joking 17th November 2010 at 2:59 pm

    David

    As I said in my original post these comments are my own opinion and I hope I’m wrong.

    I really do think the FSA should have retained the status quo for all concerned… as the old saying goes, ‘if it ain’t broke, don’t fix it!’

    However, having decided to ‘fix it’ this FSA’s current position will undoubtedly put greater preasure on the models of those companies I mentioned when compared to the likes of CoFunds, Fundsnetwork and SIS.

  11. You must be joking 17th November 2010 at 3:03 pm

    Lottery numbers:

    9, 19, 22, 39, 42, 47

    Of course, as with any thing else, and changes in the economy, weather, rules and regulations, will mean that these numbers may need to be changed without prior notice!

  12. Comparing the position pre-CP10/2 and the position now the wrap platforms have achieved significant advantage – it may have looked a little too good to be true back in March but on balance the transparency ‘penalty’ on supermarkets far outweighs the rebates as cash/units issue for wraps.

  13. You must be joking 17th November 2010 at 4:00 pm

    David

    I agree they’ll also have work to do, and I would conclude that the requirement for them to publish their rebates will give you the ability to see exactly what they are getting from whom and possibly renegotiate the discount (to be used to purchase units of course) which you can achieve.

    Undoubtedly, as I’m sure we all expected, it will be an ‘interesting’ couple of years for all concerned…

  14. YMBJ – thanks for the numbers they have every chance you had better do them now otherwise you will kick yourself if they come up!

  15. You must be joking 18th November 2010 at 12:06 pm

    Mr Fisher

    With mathematical odds of 14 million to 1, I don’t actually do the lottery.

    However, I am willing to work on a performance fee/profit share basis with anyone who decides to use those numbers.

    A kind of head I win, tails I don’t lose scenario…

    Hmmm… that reminds me of another debate we should all be having….

    YMBJ

  16. For a good number of years now I have used one of the first playes in this space – Cofunds. It may not be perfect, and may no offer everything, but it works. Plus it’s got some pretty big backers. No guarantees but a decent bet.
    A smaller “Wrap” provider recently tried to seduce me/us away, but we declined. Long term that may prove to be a very wise decision

  17. Or not. They definitely do have some supportive backers….what levels of debt do they have these days?

    Irrespective, it is clear they are here to stay, you just need to ask yourself, does their offering cover the investment needs of all my clients or only the smaller ones. Could I be offering my clients better value by using a full service wrap for a similar or cheaper price?

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