Aegon platform assets reach £110bn

Edinburgh-based Aegon UK has continued to see platform assets swell on the back of last year’s acquisition of Cofunds and hit £110 billion in the third quarter.

Latest results for the firm, which employs 2000 at its Edinburgh Park headquarters, reported net inflows of £1.4bn into its platforms for the third quarter of 2017 this morning, pointing to “favourable equity markets” as a boost to business.

The Q3 accounts note that over the period, Aegon spent around £13m in integration costs on bringing Cofunds and its existing Aegon Retirement Choices platform together.

Chief executive Adrian Grace, said: “Last year’s acquisitions of Cofunds and BlackRock’s DC business along with the sale of our annuity book have transformed the scale and make-up of our business. Reflecting our strong momentum, we delivered earnings of £25m in Q3, up significantly on the same time last year, and we are in the process of paying a dividend of £150m to Aegon Group which is representative of our strong financial position.

“The finances of the platform market can be defined by two characteristics, firstly a set level of fixed costs that every provider incurs in order to keep their systems up to date and to adapt to regulatory change and secondly tight margins. In a market where no provider can ignore these economic realities, it’s only those firms that are administering significant sums of money on behalf of advisers and their customers that will be able to generate a profit over the long-term. What’s also clear is that platforms are replacing traditional life office solutions at the heart of financial adviser’s businesses due to the efficiencies they bring to administering client savings and the greater investment choice they provide. It’s this combination of factors that led us to buy Cofunds last year and why we believe scale is so important in this market.

“In the last quarter assets on our platforms are up to £110bn driven by net inflows of £1.4bn as well as upgrades to the platform of £1.1bn. Both platforms have benefited from the momentum in the advice market and the Aegon platform in particular has seen strong inflows this year. We are also pleased to see that advisers have responded positively to the Cofunds acquisition which brings certainty of ownership, investment and has seen consideration levels for the platform rise significantly and a long term sales decline reverse this year.

“We have an important couple of months ahead but I’m confident that if we stick to our task and focus on providing advisers with the tools and services that help them to manage their business more efficiently, both advisers and Aegon will be successful. The move to a single retail platform will mark a new chapter for the business, but the combination of Cofunds’ platform know-how and investment expertise, with Aegon’s pensions and protection heritage sets us up well for the future.

“In September the transfer of £3bn of annuities to L&G completed and this marks another milestone as we move from a business focused primarily on insurance contracts like annuities, to one that generates revenues mainly through fees for administering pensions and investments. The integration of the BlackRock DC business is also progressing well and through the deal we have acquired expertise in administering large corporate schemes and master trusts which have led to a number of recent client wins. The formal Part VII transfer process is expected to close next year.

“As we approach the Budget, we have a dangerous combination of a government looking to retake the political agenda, a budget deficit that is proving difficult to eradicate and the legislative challenge of Brexit. The Chancellor may well consider pension tax relief as easy pickings as a both a cost saving and an opportunity to score political points. Recent talk of offering younger generations a cut in NI in exchange for reform of tax relief would however prove highly disruptive and should not be undertaken without significant thought. Now is not the time for radical change and the government should wait until Brexit negotiations are complete and there is time for proper debate.”