“The time to mend the roof is when the sun is shining.” That is AJ Bell co-founder and chief executive Andy Bell’s message to advisers considering migrating assets to a new platform. There are two approaches to migrating assets. Some advice firms do re-registrations as an industrial process; others do it as part of their ongoing reviews.
Bell says: “Re-reg as a job lot is less common but it isn’t that painful.
“It depends on how quickly you want to get to the other side. When you come to the conclusion your existing platform is not giving you the service you need for the price you want, the question is whether you do it as a one-off exercise or as each account comes up for review.”
Re-reg is a key growth strategy for AJ Bell’s adviser platform Investcentre. But Bell warns advisers to carefully consider the implications of technology migrations. A change in the front end of a platform has a knock-on effect to the back-end processes as well, which can be very disruptive to an advice firm.
“If one platform acquires another, either both sets of advisers will have to live with a new user interface or one will need to migrate.” He also warns there is a pricing question: “Do they level up or level down?”
Famously quick-witted and shrewd, Bell helped pioneer low-cost platforms. After graduating from Nottingham University with a degree in maths, he went to the US to coach tennis and football. “They’ve never won the World Cup; I set them back a generation.”
From there, he went on to join an insurance company and qualified as an actuary in 1993.
Bell spent his early career hidden in the depths of an insurance company, designing products for which he could see no need. “I was told ‘don’t worry, young Mr Bell, our sales team will take care of selling the product’. It was the worst side of the industry,” he says.
He founded AJ Bell in 1995 to offer a solution to advisers by doing the routine admin work for Sipps and SSASs. It launched the first-ever online Sipp in 2000 and two years later set up Sippcentre.
By 2006, with pension simplif-ication to deal with, its technical knowledge set it apart. “We’re a bunch of techies at heart, with a slightly human side,” says Bell.
AJ Bell’s evolution appears well planned and well executed. The firm acquired Lawshare in 2007 to give it stockbroking capabilities. This enabled it to deepen its services and broaden its product range.
The next strategy move was into content, which helped develop a perception of expertise around investments and provided a springboard to launch investment products.
More recently, AJ Bell has introduced a range of passive funds. According to Bell, the suite of five risk-targeted passive portfolios is at the forefront of innovative and transparent charging structures. It comes with a capped annual charge of 50 basis points.
Bell is adamant the company will not buy advice firms and believes the trend to acquiring distribution will pass.
“Are firms out there aggressively pursuing this strategy? Yes. Do I think it will carry on in the long-term? No. Some providers decide that owning distribution is the right thing to do. But we have been here before and my bet is this phase in the cycle will pass. We are in business to support independent advisers, not own them.”
The chief executive is not worried about consolidation posing a long-term threat to his business. The company is enviably diversified. He points out that if AJ Bell lost the top 10 supporting advisory firms on the platform it would not shatter the bottom line. The key is that AJ Bell does not have any significant level of dependency or exposure.
On regulation, Bell says the current regime feels quite oppressive and frets he is “spending more time thinking like a regulator, not a business man”.
He questions whether it is right to require investors to get advice for defined benefit to defined contribution transfers over £30,000.
He says: “Many customers are just trying to create an inheritable asset for their family. Many will choose to take advice on what is a very complex area but compulsory advice is paternalism gone too far.”
Bell sees people with a regulatory background getting more prominent in senior teams. As such, he worries the entrepreneurial spirit is getting pushed out of such ranks.
“I wonder where the next round of people like me will come from. The job is not as much fun as it was 10 years ago. But we are still trying to do the right thing for the customer, as we have been for the last 21 years.”
Heather Hopkins is head of Platforum.
She can be reached at email@example.com
1995-present: Chief executive, AJ Bell
1993-1995: Fellow of the Institute of Actuaries, DJT Group
1990-1993: Sabbatical to coach football and tennis in US
1987-1990: Trainee actuary, Royal Insurance