The two consistent themes we see in PlatformLand this year are the continued outsourcing of technology and ongoing chipping away at price.
With its previously flat structure up to £1m, Nucleus ticked the easy to compute box but wasn’t competitive enough for seriously large accounts, forcing some advisers to occasionally cast a roving eye. As the accompanying chart shows, this has been addressed and the new tiers of 25bps for £500m+ and 15bps for £1m+ are good news for larger customers.
What does this mean in a bigger strategic context? Platform pricing as we’ve long maintained, is converging. With core functionality boxes ticked by many, this becomes a battle about usablility, service, integration with software providers and digital. The always amusingly named ‘front-end’ will have its day in the sun.
It is interesting to note the unbridled back clapping when a platform shaves 10 bps of a platform fee… BUT the occasional snarling and moral highground which flies around when a platform secures 8, 9 or more bps competitive advantage from a fund manager. One is “down with the kids” and the other less so. It’s interesting to ask oneself why…
As most platforms report a good strong quarter, Nucleus is riding high on good profit momentum and now some pricing news which will go down well across the board. Nice one.
The chart below is illustrative only and includes various assumption about tax wrapper splits and trading. We cannot include 30 groups on a chart – we have made a subjective call about which platforms we think are often assessed by advisers who might also look at using Nucleus/already do.
Click on image to enlarge
Assumptions made in above table
- All in mutual funds
- Only reflects the platform admin fee – we have not taken into account rebates, different share classes etc
- Have not included account/wrapper set-up fees or transfers in
- Assumed 20 per cent of the portfolio changed over the year
- 20 transactions (buy or sell) per year
- Used in-house tax wrappers
- 50 per cent Isa and 50 per cent Sipp
- No cash is held within the portfolio
- AXA has stated that special terms are available for portfolios above £1m – these are not included
- For Sippcentre the Sipp wrapper fee is waived when Sipp assets exceed £200k
- For Ascentric and Sippcentre we have assumed that 50 per cent of transactions were made using models/bulk dealing
Holly MacKay is managing director at The Platforum, Richard Bradley is senior researcher