Life companies defend £225m platform spend

And how much with the RDR cost in comparison?

Perhaps we should introduce FIFA's financial fairplay rules and prevent Messrs Mann et al from shouting the merits of their businesses when they are loss making holes good for nothing than transfer pricing consultants and inter-company tax losses.

The industry slates Towry on its performance but really it is something special to have such significant assets under management, such market leading rebates and still make such losses.

Aren't these the same firms that state that financial due diligence is the cornerstone of any IFA selection process? It would be interesting to see the answers to that question when assessing these platforms against the smaller, but much more visible in terms of financials and route to profit, platforms that exist out there viz Nucleus etc.

It is rather ironic that it is only the smaller platforms (Nucleus, Ascentric & Novia) and the much longer-established Transact and Cofunds that provide any visibility over their financial sustainability.

I wonder when we'll start to find out just how deep some people's pockets really are?

Probably when Paris, Edinburgh and Cape Town decide that the untapped, immature and relatively unregulated markets of the Far East represent a better return on capital than the post-RDR world of the UK.

You may well be right BP - will be an interesting day.

A Platform is a Platform and a Life Office is still a Life Office.

You can stick lipstick on a Life Office, but its still a pig - or at least a large lumbering slow-witted dinosaur that needs to spend £squillions to pay consultants to do what those who actually understand the business can do at a fraction of the price...

...And even if a Life Company "platform" IS somehow able to achieve a degree of technological excellence and process perfection for a short period, culturally it will still be a Life Office: ill-placed to keep up with ongoing change, keen to dominate IFAs as their slaves, shift blame or stab you in the back etc etc.

Take a bow MiB - one of the all-time great posts on a Citywire blog!!!

MIB - I was thinking up a post as I scrolled down and then read your one. Kind of hits the nail on the head really.

Interesting that many observers historically differentiated wraps and platforms by their functionality (it doesn't have this or that so it must be one of those) but I'm starting to see evidence of differentiation by business model (ie it's a life company with a tool they are using to secure more revenue/assets etc, or it's an independently owned proposition providing a service to advisers). The firms I'm taling to are starting to "get it".

Be interesting to see if these independently owned propositions can finally wrestle some power from life companies, or will the custodians roll in and ruin the party for them...

interesting discussion, just out of interest where does Ascentric fit into all of this. A stand alone company that is part owned by a Life office.

It's interesting (to me anyway) that the big spends for AXA/Std have something else in common - the FNZ platform - whereas the smaller specialists tend to use GBST or Bravura (Skandia's is proprietary I think) and spend a lot less. Wonder if it's just a correlation or is there causation?

@MiB- are you Brett Williams in disguise?

YEP, nice one man in black and Bert

I hope all you new model boys disclosed the losses on your new model life companies broker funds........

An excellent article with several excellent responses which are bang on target in understanding platform development and pointing the way to the future. Well done all!

@l'ifa passeport en provenance de France - I can translate your nom de plume but unfortunately not your last sentence.

come on Bert, you know the one's who move everything on the life companies wraps and tell everyone how rdr etc they are.

@passport....I suspect the new model advisers are mostly using independent platforms. They realised years ago how the life offices work - i.e wanting to deal with old model advisers. Unfortunately for them, RDR meant there wouldn't be any old model advisers left, so they've had to panic and spend millions in a desperate attempt to catch up again with the platform and IFA market.

@ Christopher Petrie....agree,but skandia a platform? reminds me of broker funds without the "window"?

@CP and LIPEPDP - it would make interesting reading to see the provenance (sorry!) of the new asset inflows that the platform firms quote. For the "new model" platforms then it is axiomatic that their inflows are new funds as there is no legacy there. However can the same be said for people like Skandia et al where the funds could come from any old place within their aging walls!

David Ferguson is always a good source for such mischievous commentary!

Can't disagree with Man in Black.

.... and presumably MiB plus all of you other industry sages have a background in IT and a good understanding of all the technical ramifications of platforms and life co systems that have for decades forked out bucket loads of commission that have been the main stay of the survival of many IFA businesses!? I don't see many of these beleaguered companies partying however?? Maybe the lip-stick hasn't found the real pig yet! I have found some nominations I'd like to make - anyone interested?

@Mr C Sense

Yes, I have a reasonable grasp of systems and have been programming for 30 years (i.e. since the age of 7).

Most Life Companies operate multiple 'core' IT systems - one I know of still operates 17 such systems. If you want to understand how well they perform, take a look at the Consultation around Cash Projections where FSA suggested that Cash shouldn't be projected at 7%. The Life Industry claimed that correcting their systems would cost about £100m - whereas having written projection software in VB before, I can assure you that properly written code would treat the projection rate as a field on a table that could then be tweaked in the space of about 5 minutes...

...Nor incidentally is is particularly difficult to code the key modules that you need to emulate a wrap platform e.g. from reconciling client accounts against safe custody assets to building an ASP.net front end for the client....In most cases, however, its a case of marrying an understanding of the subtleties and nuances of processes attaching to the subject matter with the programming....That's why small multi-skilled teams starting from scratch with the right development environment can achieve fairly slick efficient applications with relatively low budgets whilst large lumbering dinosaurs will p*** £hundreds of millions of pounds down the drain as large teams of developers talk at cross purposes with large teams of specialists amidst 17 pre-existing core IT systems...

As for your point about commission, not sure I understand.

The Life Companies paid commission to IFAs because IFAs used to sell their products and this was a cheaper distribution channel than their own loss-making DSFs (which they couldn't run either). Life Companies did not pay commission to IFAs out of the kindness of their hearts. Indeed, until they demonstrated the business acumen of 3rd rate Civil Servants by agreeing to the Stakeholder nonsense, Life Companies recovered all the commission (and more) by tricking clients with complex and poor value charging structures.

We have nothing to be grateful or thankful to them for - other than the challenge of doing our best to rectify the poor reputations they have bequeathed to us.