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Platforum: Cofunds deal is shrewd but Aegon has to win over advisers


After a prolonged period of uncertainty, Aegon’s acquisition of Cofunds is good news for Cofunds users and good news for the industry.

Whilst the sale of Cofunds for £140m represents a £65m net loss for Legal & General, it is in line with L&G’s stated strategic intent to focus on its corporate assets. Some might argue that L&G has secured an excellent price for Cofunds given the £700m in outflows from Cofund’s retail platform between June 2015 and June 2016 and its creaking technology.

But we think that Aegon’s move is shrewd.

The investment distribution deal with Nationwide is a real coup for Adrian Grace and Cofunds opens up access to a new pool of advisers.

One of the potential risks that prospective buyers will have weighed is the relatively mixed nature of Cofund’s retail book. There is likely to be a reasonable percentage of orphan clients in the mix.

But Aegon needs customers in the funnel.

Its horizontally integrated proposition spans D2C, advised and workplace, meaning that it can service the whole spectrum of Cofunds’ clients. And advisory firms wanting to head for the exit are likely to have done so by now. We think that many firms will wait to see what Aegon can bring to the table rather than immediately voting with their feet.

Cofunds users will care about functionality and Aegon has a more comprehensive range of tax wrappers and products to offer, including ETFs. They will also care about price.

For low to average portfolio sizes, Cofunds pricing is at the cheaper end of the scale whilst Aegon’s is a lot punchier at around 45bps. But Aegon’s fees are 0 per cent for assets over £250,000 – effectively capping charges at £1,215.

For portfolios of £500,000 and up, Aegon is cheaper than Cofunds. Aegon is clearly making a play for larger portfolios.

The Cofunds retail book is concentrated in ISAs and GIA – only 4 per cent of assets are in pensions as at Q4 2015 – and Aegon has a strong pensions pedigree. Aegon’s pricing strategy suggests that it is betting that advisers using Cofunds will look to consolidate pension assets alongside ISAs and GIA on an integrated Cofunds/Aegon platform to take advantage of the attractive pricing for larger portfolios.

If this strategy is to pay off, Aegon must be at the top of its game because other platforms will be circling.

There is hard graft ahead for the Aegon team – it must boost its brand and reputation with a broader base of advisers.

Aegon’s platform comes in for some criticism from users for ‘not being adviser friendly’ and any D2C play for orphan clients must not come at the expense of advisers’ trust.

Aegon must now deliver on its target of achieving £60m of cost savings by migrating Cofunds on to its more modern technology. The £80m one-time expense should stop costs from spiralling.

However, we see this as ‘smart consolidation’. Far from being a naked asset grab, the Cofund’s acquisition is logical unlocking significant opportunities to drive forward Aegon’s horizontally integrated proposition.

We hope that the Aegon team will rise to the challenge.

Miranda Seath is a senior researcher at Platforum



Aegon confirms £140m deal for Cofunds

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Advisers are likely continue to pull assets away from Cofunds regardless of the continued uncertainties around the sale of the business, experts are predicting. Cofunds has lost £500m of its retail assets as advisers switch away from the platform, Platforum estimates. According to a Q1 adviser survey conducted by Platforum, 42 per cent said “commitment of the […]


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Cofunds has lost £500m of its retail assets as advisers switch away from the platform amid uncertainty over its sale, data from Platforum shows. Estimated assets under administration data from Platforum shows a drop in assets from £37.5bn to £37bn over the first quarter of this year for Cofunds. According to a Q1 adviser survey conducted by Platforum, […]


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

  1. Your assertions of a ‘good move’ assume Cofunds and Aegon can access the more affluent clients either directly or through IFAs whose traditional heartland is mass-market and low-end of mass- affluent; Good luck with that. The risk isn’t of other platforms circling – the risk is Aegon has now inherited L&G’s problem and problem of 35 other players – Scale of Assets doesn’t equal ability to be profitable!

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