Chief executive of Old Mutual Wealth, Paul Feeney (pictured), made a tough decision to drop a platform technology project with IFDS where the spend was already at £330 million.
The project has now been started afresh with technology provider FNZ while the date for the de-merger from South African parent company Old Mutual and an individual listing hangs on the horizon. Indeed Feeney reveals that its most recent interim results, in June, will probably be its last before the listing.
Feeney told New Model Adviser® how he made the decision on the platform project, and why he is happy with it, but how he still harbours regrets about the way the business is talked about.
What was the tipping point which made Old Mutual Wealth decide to drop the replatforming project with IFDS?
I took that decision and I am responsible for it. I recommended it to the board which was fully supportive.
I certainly was not prepared to stand up to the stock market again and say this project is taking longer and costing more.
Having done it a couple of times, that was the last time I was prepared to do it.
So now I do not have to [tell the stock market that]. We have moved on.
In the three and a half years of the project we had had to keep reducing the scope of the IFDS platform to get it done.
It got to a point where some of the others in the market, like FNZ particularly, were now delivering services beyond what we could deliver on day one.
What have you learned from the replatforming project?
My team working on this project has gained a lot of experience. It has been nice to get the compliments from [FNZ group chief executive] Adrian Durham about how professional my team is.
They have learnt a lot and we have hit the ground running.
Even just understanding all the nuts, bolts everything about how our UK platform system runs.
Our UK platform alone has £45 billion of assets under administration. It is big.
Having a team which knows every part of that proposition and which is able to sit down with a team in FNZ which knows the same from the FNZ platform, this is bearing fruit.
The regulator has voiced concern about the concentration risk of having only a handful of platform technology providers. Do you share its worries?
One of the key issues is not so much the number of players but whether they are regulated. Very few platform suppliers are. FNZ submitted itself voluntarily to be a regulated entity.
It is a market where the suppliers to the platforms increasingly supply utility services so you want to make sure your supplier is financially strong, managerially strong and well-regulated.
[The issue of regulation] was not an issue at all in terms of making our decision about not working with IFDS but it was certainly a factor in our selection of our new supplier.
10 years ago most of the suppliers to the platform market were fairly small companies.
Fast forward and that has changed. Our regulatory construct needs to keep pace with these changes.
Will you continue on as chief executive of role after the de-merger?
I am not saying anything. All I want to do is build a business I am proud of and at some point in time I would like to leave feeling proud it is making a contribution to our nation and our society.
The point at which I hand that work over is when I feel someone else can do the job better than me. And that time will come.
How does the prospect of de-merging and listing the company look now?
The most recent interim results will probably be our last before we list and they give us a really good platform from which to do so. We are pleased with net client cashflows and also integrated flows which have trebled to over £2.1 billion.
In terms of the market capitalisation we will reach, I do not even talk about it any more. The bankers will decide on that.
[If market conditions are unfavourable] it is not as though we only have a short window within which to list.
Are you happy with Old Mutual Wealth being classed as vertically integrated?
I think I may have even come up with the term vertically integrated in this industry and I regret it now. As a term that is, not as business model.
I spoke about it so the analysts could understand what we were doing to build this business. I wish I had used the term ‘full service wealth management’ or ‘end to end wealth management.’ Something like that. All we really mean is putting together elements of the value chain for the benefit of our clients- working together to deliver solutions that bring the right outcomes for clients.
Restricted advisers in the Caerus network could move clients to the restricted Intrinsic proposition as the Old Mutual Wealth-owned network just acquired Caerus. Does moving clients from one restricted proposition to another damage trust in advisers?
It depends if the proposition is better.
We will look at the best proposition and for the client there should be no turbulence.
If they are moving from one solution to another they have a right to know we believe, and can show them, that it is a better solution for them. And we have a duty to show them that. Otherwise we will leave them where they are.