Advisers urge Aegon for heavy Cofunds investment


Advisers have registered a mixed response to Aegon’s acquisition of Cofunds with hopes the insurer will invest more in the platform than previous owner Legal & General, alongside price-hike concerns.

Aegon confirmed its purchase of Cofunds for £140m in its results announcement this morning. The deal means Aegon will be the biggest platform provider in the UK.

Chelsea Financial Services managing director Darius McDermott views the deal positively and hopes Cofunds will get the investment that was not delivered under L&G’s ownership.

McDermott says: “Cofunds had stagnated under L&G’s ownership. They certainly did not invest enough that was required to make it a market leading platform. We are confident and hopeful that some of the product and technology enhancements that Cofunds has needed for a number of years may now be delivered.”

Investment Quorum chief executive Lee Robertson considers whether Aegon invests in Cofunds depends on if it wants to keep it as a platform.

He says: “If they want to have it as a platform they will have to because it has become old technology. If they want to move assets into stuff they have already got then it will be a question of whether they run it down and migrate the assets or whether they put some momentum behind Cofunds and put some money into it.”

Informed Choice managing director Martin Bamford adds: “I don’t think companies splash that much cash on a deal unless they have got a genuine intention to invest and improve.”

However, he says migrating assets is no small task and involves a lot of work for advisers in having to confirm ongoing suitability.

Bamford explains: “We have between £12m and £15m of assets on Cofunds. In respect of those assets, we will be writing to those clients, probably having to phone up to check they are happy with the migration and in some cases move them to an alternative.”

Bamford is concerned prices might also rise for Cofunds customers.

He explains: “With scale comes the option to reduce prices so the customer pays less but, at the same the deal will be expensive. The first few years if they are investing in the platform it could mean higher prices for Cofunds customers. I suspect many of them, particularly the advised ones, won’t have an appetite to pay more and there are other lower cost platform options out there.”

But Cofunds chief executive David Hobbs says there is “no intention” for charges to go up, adding fees may fall in the future.

He also plays down the impact on advisers.

He says: “The level of disruption will be relatively light but recognises there will be some new ways of working for advisers. At its heart Cofunds has always been an intermediated business and is well respected in terms of how it works with advisers.

“We haven’t always had the proposition that matches people’s needs, but when I meet advisers they are always highly complementary about our engagement and that counts for an awful lot.”