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Old Mutual Wealth platform upgrade costs soar to £250m

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Old Mutual Wealth has seen the cost of migrating its platform to IFDS soar from the £160m originally budgeted to £250m.

Its half-year results, published today, reveal the project to outsource its platform admin and technology to IFDS as part of a 20-year deal is costing an extra £50m more than expected.

Old Mutual Wealth has also spent a further £40m building an “improved customer interface”, which the company says will the platform’s scope.

The company says it is roughly halfway through the migration, with new system now expected to go live at the start of 2017.

Platform assets under management on the platform rose from £28.8bn to £32.9bn, while platform profits rose 30 per cent from £10m to £13m.

Old Mutual Wealth expects to pick up an additional 220 new wealth advisers as a result of its partnership with Sesame Bankhall Group following the latter’s decision to close its investment advice advice.

Old Mutual currently has 988 advisers in its restricted network, with that number now expected to top 1,200 by the end of the year.

Intrinsic advisers once also boosted Old Mutual’s platform sales in the first half, with net flows on its platform rising 33 per cent from £900m to £1.2bn this year, with 24 per cent of the increase generated by Intrinsic advisers.

Overall profits climbed by just over a quarter for the first six months of 2015.

The firm recorded pre-tax adjusted operating profits of £151m, up by 26 per cent on 2014’s equivalent figure of £120m.

Old Mutual Wealth chief executive Paul Feeney says the firm is benefiting from offering a range of services to advisers in a single place.

He says: “Advisers will decide how much of the integrated proposition to use for each client but by offering it all in one place we can do so at very good value for advisers and their clients and underpin it with first class service.

“These results are starting to show that strategy gaining significant traction in the market.”

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Comments

There are 5 comments at the moment, we would love to hear your opinion too.

  1. Half way through the migration and costs increased by £90m – keep counting this is just the beginning.

  2. Clearly needs an intervention. Whoever is responsible for the programme should take a long hard look at why. It is obvious something needs to change and some accountability taken. Feels like a lot of resource costs and not enough clear direction. Successful delivery comes from smaller team of accountable people focussed on outcome. Just throwing resource at a problem never solves it. The latter being the typical approach of large programmes. As a significant pension investor with OM Wealth what assurances do I get that my money is being spent wisely to keep costs to a minimum. You can bet your bottom dollar £250m won’t be the final figure. Somewhere north of that!

  3. I could not agree more with the comments already made as a firm of advisers operating in Europe we are constantly fed inaccurate information from OMI and their time scales are not adhered too. The old system seemed to work well we received fees on time and could service our clients now we receive fees with no names or policy numbers so we have to send the fees back as we cannot collate the information. Servicing the client has become difficult with OMI as they provide inaccurate information on policy valuations so it’s a nightmare and we point out these problems they just shrug their shoulders. We will be migrating away from OMI in the future.

  4. that seems very expensive (and I work in projects) – although what they have to do is quite technically messy …… are they really investing 19 future years of their current profit into this change?

  5. A few years ago there were some shareholder activists in South Africa lobbying the board to sell the UK operation because of low profits and the negative impact on the share price. I suspect we might start to hear more about that again – anybody monitoring the South African financial press as part of their continuing due diligence on the use of this platform?

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