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Nucleus: Some platforms just a ‘distribution channel for in-house fund management’

Adviser platform Nucleus has said a divide is emerging in platforms between firms using them to market in-house products and those actually looking to improve adviser efficiency.

Releasing its annual results for 2018 this morning, the firm’s chief executive David Ferguson also questioned whether discount deals from platforms looking to drive assets to their own group funds would stand up to scrutiny as Mifid II disclosure rules take effect.

Ferguson writes: “It is increasingly apparent that the advised platform market is polarised between those who see platforms as a distribution channel for in-house fund management and those seeking to make financial advisers more effective in the pursuit of better customer outcomes.

“Platform pricing continued to drift downward in 2018, somewhat catalysed by special deals available from certain platforms aiming to drive in-house fund flows…It remains to be seen how durable such deals will prove in the light of new fee disclosures.”

Nuclues reported a 2.3 per cent increase in assets under administration over the year from £13.6bn to £13.9bn, while post-tax profits increased nearly 16 per cent from £4.1m to £4.8m.

There was a 6 per cent increase in the number of active advisers from 1,317 to 1,396 over the last year, and a 7 per cent increase in customer numbers from 87,556 to 93,715.

While Ferguson notes that, overall, while the platform market faced a more challenging year in 2018 than the previous one, fund managers would bear the brunt of scrutiny in the coming months.

He writes: “Despite the well-publicised market headwinds, we view the outlook for better quality advisers and those that provide services to those advisers as positive. We similarly believe that platform pricing will continue to correlate to the utility value on offer and that while all components in the sector are set to experience price compression, the greatest focus will arise in asset management where transparency is a more contemporary concept.”

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