Tech investment could pay off for Ascentric

Miranda SeathIn this week’s platform focus, we turn our attention to Royal London’s Ascentric. Of the 23 platforms we track, it is the 11th-largest in the UK by assets under administration, with £9.6bn as at 30 June.

The platform’s AUA growth has been slightly behind the market average but this appears to be due to greater exposure to volatile markets. With higher than average case sizes, the platform has an increased diversity of investments and carries more exposure to volatile stocks.

AUA is up 19 per cent for the 12 months to the end of Q2 and we see this as a fairly good result, considering it has been focused on replat-forming for the past two years, limiting its capacity for proposition development. We see a rosier picture for net sales on the platform in Q2, with a 43 per cent increase from Q1.

Since managing director Jon Taylor’s move to Ascentric in January, Royal London has sold the client book of its D2C proposition Fundsdirect to Strawberry, signall-ing a clear intent to concentrate on providing services to the intermediary market. Its recent deal to provide a white labelled platform to Partnership will broaden its reach in the adviser market further.

Clearly, Taylor’s strategy and ambition is sound but it has yet to translate into a real turnaround in Ascentric’s adviser ratings and we have seen a shift away from advisers using its as their primary platform. In Q4 2014 (the first quarter we collected this data), one-third of advisers we surveyed using Ascentric classed it as their primary platform. This has shrunk to just 17 per cent in Q2 2015, while the share of secondary platform users jumped up from 18 per cent to 57 per cent over the same period. Advisers tell us the Ascentric website is clunky and slow. Indeed, its scores for web usability and usefulness of online tools are below industry average.

The platform does not offer risk profiling or asset allocation tools but tells us this is a deliberate strategy based on feedback from advisers. However, it recognises its technology is in need of an overhaul and has invested heavily. It assures us we will see in upgrade in Q1 next year.

On the other hand, advisers consistently tell us they are very happy with the range of funds and tax wrappers available on the platform. Investment choice really matters: 74 per cent of those we surveyed in Q2 placed it in their five musts of the perfect platform. Of those that provide us with data on tax wrappers, Ascentric is the only platform that offers Qrops, with SSAS and Section 32 wrappers also available. Cannily, it has also responded to the growing demand from advisers to outsource to on-platform discretionary fund managers, offering access to 37 DFMs. Of the 48 per cent of total assets on platform in model portfolios in Q2, 46 per cent of these were in DFM models.

In a series of interviews we recently conducted with DFMs, Ascentric was named as one of the favoured platforms to work with, offering the back-office support needed for model portfolios and bespoke fund picking. We see the movement of discretionary assets on-platform as a key growth area for the adviser platform market in the next three years. With the launch of a new front end and the transitioning of its back-office platform technology to Bravura’s Sonata, 2016 looks set to be a signifi-cant year for the Ascentric business. These developments may just provide the shot in the arm it needs.

Miranda Seath is senior researcher at Platforum.