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Platform Focus: Club-like Nucleus is real player

Nucleus was launched in 2006 as an ‘independent wrap platform’ for IFAs. Led by vivacious chief executive David Ferguson, Nucleus prides itself on being a different creature to the more traditional life company platforms. AUA reached £6.78bn as at 31 March  and the £7bn hurdle has now been passed.

The platform likes to tell us that the business is run for IFAs, by IFAs, and Nucleus relies heavily on its users for feedback on developments – there is almost a ‘club culture’ about the platform.

Advisers are generally loyal to the platform – Nucleus is the primary or sole platform for the majority of its users. 

This positive feedback is reflected by Nucleus’s third place in our user leaderboard, which is entirely based on adviser platform feedback. Parmenion come top and Transact is second.

With a flat 35basis points fee for the majority of client assets, the platform is reasonably priced. Service is generally described as good and a few stumbles last year seem to have been corrected.

The platform has been outspoken against the broader market move towards clean share classes. As we see more integration between platforms and asset management businesses, it is clear that a differentiator for Nucleus will be the lack of a multi-manager or portfolio construction capability in-house.

This will likely remain a platform for those IFAs wanting access to a broad range of funds and investment vehicles, who do not believe that a platform should play any role in filtering investments. 

While the lack of bias makes this a clean model, the relatively small asset base will not support Nucleus in getting the most competitive deals on fund pricing.

When surveying its own advisers, Nucleus reports ambivalence towards preferential share classes; 76 per cent of its advisers said that either any reduction in basis points would not be meaningful enough to influence their platform or that it would take a reduction of 10bps or more. 

As negotiations continue, we suspect  the pricing advantage which will be commandeered by larger players over the medium term cannot be so easily dismissed.

Our favourite non-attributable comment about Nucleus (from a competitor CEO 18 months ago) is that “Nucleus is in danger of becoming relevant”. We think that has happened and the platform is now relevant and a real player.

Holly Mackay is managing director of The Platforum

bigplat

ADVISER VIEW

Childs-Arthur

Arthur Childs

Managing director

Arch Financial Planning

Nucleus tries to keep things simple. The charging structure is pretty straightforward in comparison with other wraps, which often seem to have lots of little charges for different services. Setting up model portfolios on the platform is extremely easy, which is ideal for our business. Through Nucleus, we have also made lots of useful connections. For example, there is a practice development group which has formed through Nucleus to discuss how we can grow our businesses. The platform is relatively light on some of the bells and whistles services on other platforms but many of those tools risk making the system complicated to use.

 

 

 

 

 

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There is one comment at the moment, we would love to hear your opinion too.

  1. How is 0.35% reasonable ? For a small portfolio of say £20,000 ok but for £600.000 ? As an investor why would I want to pay £2100 pa when I could go to Alliance Trust and pay £75 pa. True I might have to pay for a few switches but how would I managed to get up to £2100 pa .

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