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Novia boss: Platform ‘consolidation’ is just large provider failure

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A failure in large providers’ business models has sparked recent platform acquisitions, according to Novia chief executive Bill Vasilieff.

Vasilieff says deals such as Aegon’s acquisition of Cofunds and Standard Life’s purchase of Axa do not reflect a consolidation trend but unrealistic expectations at large firms.

He says: “This year has been quite difficult for some platforms and the news around two of the big ones – Cofunds and Axa – has been significant. But I don’t think there is a consolidation trend. I think what’s happened is that some of the big players had very high expectations on profits and they have failed. Now they are exiting the market. Also, some people don’t see platforms as businesses in their own right; they just see them as a way of getting funds.”

Many legacy life companies have pulled out of the market as platforms have evolved, with around 70 folding since the birth of platforms, according to Vasilieff.

He says: “Only a few are left and some have adopted some platform businesses.

“So I don’t think the platform space is overcrowded as many say. It is a big market, probably the fourth biggest in the world for investments.”

Novia had assets under administration of £4.1bn as at Q2 of 2016.

For Money Marketing’s full interview with Bill Vasilieff, see pages 22 and 23 of this week’s magazine and our profile online this Friday

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Comments

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  1. I heartily agree with Bill, indeed you can take this line of thinking further. It seems to me that there are two business strategies at play in the platform market. The first are those who are building viable, sustainable and profitable businesses which partner with advisers to help them grow more successful as well. The second are speculators who aim to grow assets under management as fast as possible with the hope that size = profit somewhere down the line, to whom advisers are one of many ‘distribution’ channels to be exploited. The main 2016 consolidations are a couple of classic failed speculators. the other dividing line between the two tends to be the “new kids on the block” and the legacy companies (mainly the old life co’s) targeting market share at any price but overpaying dramatically in the process. Hopefully reasonable IFA due diligence can distinguish between the two.

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