There’s really just one subject to cover this week; one news story that will run and run and drown out everything else until you’re completely fed up.
That story is, of course, the sale of Ascentric to M&G by Royal London. Ho, ho. There was nothing you could do about the weary inevitability of that ham-fisted, basic bait-and-switch opening. I’m not even sorry.
So, Ascentric then. First things first, a bit of disclosure: Ascentric is a client of the lang cat; we help the nice people there with bits and bobs, the odd bit of car washing and that. But we weren’t privy to any of the stuff around the disposal and heard exactly the same rumours as everyone else.
Turns out one of those rumours came good – the new owner, subject to regulatory approval of course, will be M&G.
Here’s what I think I know. As normally happens in a transaction of this type, it really is just a change of ownership at outset. M&G isn’t a platform business; the Bravura instance that’s inside the Pru estate just now is running its Retirement Account personal pension and not much besides. So we’re not smushing two platforms together here, or even really running a twin-track platform strategy in the way that Standard Life Aberdeen does with Wrap and Elevate. You use Bravura quite differently if all you want to do is run an insured PPP compared to running a full open-architecture platform, so I’m not sure that potential product synergies are part of all this.
Practical stuff: Ascentric keeps its name, the operation in Bath and its chief exec, Rob Regan. M&G will invest more in Ascentric functionality and keep it rolling as a viable platform. Longer term you have to expect that there will be some changes – if nothing else, Ascentric uses quite a lot of the RL corporate shared services and all that will have to move over. But that’s just normal course of business stuff.
Here’s what I think I think. This looks like good news in terms of an end to uncertainty if you work for Ascentric, and if you’re an Ascentric user then it’s probably very good news. In the mix too are the white-label users of the IFDL platform (who control about £5bn AUA), and I should think they’ll also be comfortable with this.
In terms of where Ascentric is, there’s no point in saying it’s had an easy ride or that replatforming has been a good experience for users. In fact, about 4 of the 12 or so years that RL’s owned it have been spent on replatforming of one sort or another. But it’s pretty much through the problems now, and operationally I think it’s in the best shape it’s been for a long time. It’s completely different to what it used to be; that means that firms who used to use it in the Bluebutton days and try it again now will have to get used to it all over again; that’s not the same as it not working. It’s also coped better than many with the Current Unpleasantness.
The main thing with platforms is that they need to be loved. As I’ve said in previous Updates, if RL doesn’t feel that it can love Ascentric, then it’s right to ship it on to someone who can.
So why does M&G think it can love Ascentric in the right way? At the risk of coming across a bit Benjamin Braddock, I just want to say one word to you: Prufund.
M&G has great institutional distribution. It’s got great retail distribution through the Pru: Prufund is a total machine and one of the great success stories of the last decade, though we don’t talk about it all that much. But what it doesn’t have is a successful implementation of that approach through platforms for intermediaries of whatever stripe and hue that don’t love the idea of writing off-platform PPP or bond business. Now it has that third string to its bow, and an in-house test site for getting that working. Remember that M&G is big – well over £300bn – so I don’t think the game here is about Ascentric’s £14bn. Lots of people have said for a long time that if something like Prufund could live in the platform world it could be a game-changer (horrible phrase, sorry) – watch this space.
There is a long road to travel, and of course there is nuance around all of this. M&G has lots of investment options, not just Prufund. Ascentric needs to keep its open architecture stance. And fund manager ownership of platforms hasn’t always been positive. But I think I see a proper rationale for this; I’m colouring it ‘promising’.
- SJP results are out – gross flow is down but nets are up slightly. So pretty much like the IFA market generally, then.
- Distressing news on scams from this Canada Life survey – this has got to become priority #1 for the industry if we ever want greater trust from the public.
- HomeGames this week will be a good one – maybe the Greatest Of All Time – with Richard Clark from Origo and maybe another special guest, maybe not. Join us at 12.30 or watch again later here.
- And your music choice this week is entirely because I finally got confirmation of when Faith No More have rescheduled their June tour to. So please come with me back to 1989 and enjoy From Out Of Nowhere.
See you next week. Don’t drive if you’re worried about your eyesight.