Aegon and Cofunds: Your questions answered

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For adviser use only 

 

As you know, the joining together of Aegon and Cofunds is set to create the largest advised investment platform in the UK. While I talk about the integration of these two businesses frequently in Fresh Perspectives, in this edition, I am keen to address some specific adviser questions I regularly get asked about the integration.

What was the thinking behind bringing these two companies together – apart from creating scale?

We strongly believe that as people are expected to make increasingly critical decisions ‘to and through’ retirement, the need for expert advice is going to increase. That will, in turn, drive use of those platforms that support advisers.

Aegon is fully committed to supporting advisers, and Cofunds’ commitment as a B2B platform provider has earned the loyal support of its users. So there’s perfect synergy in our collective energy and commitment to help the adviser sector prosper. The extremely positive experience we’ve had so far of bringing together the two firms and their respective cultures has validated that choice.

We want to be the platform provider that advisory firms trust to help them grow profitable and valuable businesses – whether your focus is on the workplace market or supporting individual customers. We aim to give firms total flexibility to choose the business model that suits their client book and their opportunities.

What benefits will being a scale player bring?

Our two businesses currently have combined assets of over £100 billion. But as impressive as that sounds, it’s only worthwhile if we can make that scale work for you, and the customers that you serve, by driving value and extending choice and opportunity. So, that’s our aim here: scale with a purpose.

Plus, we don’t intend to stop at £100 billion. We’re looking to earn adviser support so that we can double funds under administration. This will give us the financial strength to bring down costs for both advisers and investors, and to keep investing in our technology and services over and above what’s required by regulatory change. Being a £200 billion business will also give us more scope to create value for shareholders – and therefore assure long-term support for what we do.

What will the integration mean for pricing?

Aegon has already made a commitment that no current customer’s pricing will rise as result of the integration. Indeed, we’ve made no bones about the fact that we want to be a scale player so we can drive down costs both for you and investors.

You’ll be able to rely on us to examine constantly how we can improve pricing, while retaining quality of service and investment in our technology.

What can Aegon users expect from the combined platform?

First, it’s important to stress that the integration of Aegon and Cofunds is principally a technology upgrade, not a new platform build. As such, our timelines for integration are relatively short. As no replatforming is required, you shouldn’t have to revisit advice or platform suitability. The impact on you, your clients, and back office activity will be minimal. Beyond that, our goal is to offer the best of what Aegon and Cofunds do now but on one platform.

Much of what we’ve said about the upgrade of the Aegon Retirement Choices (ARC) platform has focused on what our plans will mean for users of Cofunds, as that technology was most in need of a refresh. However, current users of ARC will also start to see benefits as we combine the best of both propositions onto a single platform. Among the first improvements you’ll see are:

  • Removing the need for a minimum cash balance, currently 0.25% of the wrapper value
  • If your client has INC share class funds, we’ll give them additional distribution options such as automatic reinvestment of investment income or to receive an automatic monthly income of the investment income received from their investments in that month
  • Introducing pre-funding of linked trades so that we place the buy order on confirmation of the sale from the fund manager before we receive the cleared funds

In addition, we’re introducing an enhanced digital user interface for advisers and a separate digital portal for customers, which you can brand for your business, and will also be optimised for both mobile and tablets.

To what extent are advisers influencing the combined offering?

A great deal. We’ve been talking to both Aegon and Cofunds users about what they like about the platform, what they don’t and what they envisage they will need in the future.

Our Advisory Board, which comprises 30 advisory firms of all sizes from across the UK, has already met three times and will continue to do so throughout 2017 to guide our strategic direction, as well as the detail of our proposition.

We have also created an online Advisory Panel that allows all other advisory firms currently working with Aegon or Cofunds to have their say and to feedback on our plans. By closely involving advisers, we want to co-create a platform business that you feel invested in, and that ultimately benefits your business and clients.

We’ll also ensure that your views on the issues affecting your businesses are heard in our conversations with government and the regulator.

Has Aegon got any aspirations in the Direct Platform Market?

Like Cofunds, Aegon has no interest in the D2C platform market. We will enable you to offer your clients a self-directed online service if they wish – something that Cofunds has done with a lot of success. But what will set our combined platform apart from others is our commitment not to compete with advisers for distribution. Our strategic focus is to become the most trusted platform in the intermediated market, helping you to grow and to create real value as well as greater efficiency. Quite simply, if we help you to be successful in your business, we’ll be successful in ours.

While this list of questions is by no means exhaustive, I hope that it gives you some further insight about the integration and the future of the business. Our strategy and our position is clear; our job is to serve our intermediaries and distributors, not to compete. The most important task is to make sure that you are well informed and we meet your expectations.

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