Skandia agrees outsourcing deal with IFDS and posts £2m profit

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Skandia has agreed a 20-year deal to outsource the platform’s administration, processing and technology to International Financial Data Services.

Skandia’s front office telephone and email contact teams will remain in-house, with Skandia investing in new technology to boost efficiency.

Fundweb sister title Money Marketing revealed Skandia was in talks with IFDS over outsourcing its technology in February. The integration of IFDS administration with the Skandia platform will begin in 2016.

IFDS, which previously held a 24 per cent stake in Cofunds, provides administration on 60 per cent of UK mutual funds and is looking to develop a fully integrated platform proposition. It is part-owned by US investment software firm DST Systems.

The outsourcing deal was announced as the Skandia platform posted an operating profit of £2m for the first half of the year, compared to a £1m loss for the same period in 2012.

The platform saw net inflows increase 8 per cent from £1.2bn to £1.3bn, with gross sales up 5 per cent from £2.2bn to £2.3bn.

Funds under management on the platform rose 11 per cent over the first half from £22.6bn to £25bn, while funds under management for Skandia’s legacy business, including the UK legacy book and the Old Mutual Wealth Europe closed book, grew 9 per cent from £14.3bn to £15.6bn.

Overall funds under management for parent company Old Mutual Wealth, including Old Mutual Global Investors and Skandia International, are up 9 per cent from £69.2bn to £75.2bn as at 30 June.

On the IFDS outsourcing deal, Old Mutual Wealth chief executive Paul Feeney says: “This relationship represents an investment in our business that will enable us to efficiently continue to improve the service and products we offer to financial advisers and their clients.

“We will be able to respond to adviser and customer needs faster than we can today and deliver additional functionality and greater flexibility to advisers via the UK platform.”

On Skandia’s results, Feeney says: “Our aim is to be the best investment business in the market and these results, with strong sales growth and profitability, are a good endorsement of the proposition we are offering financial advisers.

“The UK platform had a slow start to the year as we implemented significant changes to accommodate the RDR but it is pleasing to see a significant pick up during the second quarter which has led to growth in both sales and profit for the first half of the year overall. We continue to work with financial advisers to ensure our proposition is aligned to their needs and ongoing new business volumes are encouraging.”