Our HomeGames series of conversations with platform chief execs continues with Ascentric CEO Rich Denning - watch the full interview with Mark and Rich below

I took over as Ascentric chief executive in January, following M&G’s acquisition of Ascentric in September.

I sit in a newly created part of M&G called M&G Wealth, which includes The Advice Partnership, Prudential Financial Planning, a small book of business from M&G Direct and the Ascentric platform.

Our aim in the Wealth business is to try and help bridge the advice gap – we’re not looking to compete with big adviser firms and those that look after high-net-worth clients.

What we are looking at is the solutions and technology we can deploy to support what the market would typically describe as the smaller value customer. That’s really one of the mainstays of what we are doing.

Environmental, social and governance investing (ESG) is another big corporate mission of our’s, and one that flows through everything we do.

In the last quarter (Q1 2021) we saw 32% of money coming into the platform going into ESG funds, and when I speak to advisers, they’re seeing demand from clients who want to invest more sustainably.

As a group we look after £367bn of people’s money. We want for all of that to be in sustainable assets by 2050, and we’ve got a roadmap to do that.

Lessons from replatforming

In terms of the platform itself, it’s no secret that we went through quite a difficult replatforming to Bravura.

We've cleared all the issues we had, so the platform works and the service is better, though there’s still more we can do.

But we are starting to see some green shoots, and we're starting to have different conversations with adviser firms now about the kind of things we're doing.

The headlines will tend to concentrate on PruFund, and that’s only natural for a flagship product.

But the majority of our efforts are now being spent on every aspect of the platform that makes it better for people to use, whether that’s straight-through processing, more efficiency or tackling any niggles or nagging problems. That's really what I spend the bulk of my time on, and steering that transformation agenda to make the platform better.

I think there's a slight misconception that people like me sit in rooms and go: “Wouldn't it be a great idea to replatform?” It's just not the case.

You look at every possible opportunity and alternative, from upgrades and modules to integrating with newer providers or back-office systems. You literally look at every single thing you can to avoid doing a big, expensive, complex replatforming.

The platform market has changed and evolved a lot over the last 20-odd years, and platforms have had to change with it.

Platforms have grown up over the years based on changing demographics, changes in the needs of the market, regulatory change and based on what different adviser firms are asking particular platforms for.

Specifically in our case, what I think happened based on reading and looking back at some of the lessons learned was an attempt to build a greenfield, modern platform based off a vanilla Sonata implementation.

That was followed by testing in the market, then trying to retrofit some stuff back in and ending up with a hybrid approach.

This resulted in lots of things being done manually and being caught in a kind of no man's land, where we weren’t offering lots of new proposition developments and we weren’t replicating the past.

There are some lessons I think when it comes to replatforming overall.

These are that platforms need to take time and money to do it properly, and really try to bring as much of the past forward as you can and if you can't, be really clear why you can't.

I have had some experience of platform migrations in the past, particularly with Aegon/Cofunds. There are always different lessons depending on where you’ve been.

Looking back with Ascentric and what we might have done differently, it’s about understanding the proposition gaps we were creating and engaging with advisers on those gaps.

It’s about understanding the features that are really important to the advisers you’re working with, and being really clear about what you’re delivering. Then it’s about doing it on a phased basis, testing and learning as you go. A big bang replatform I would avoid at all costs.

The question of private equity

I have done some consulting previously for a private equity firm, and it’s an interesting space. They scan the sectors that they specialise in, and they’ll look for targets that can meet their financial model.

Private equity has actually been in and around wealth management for some time, particularly in adviser consolidation, and that doesn’t show any signs of slowing down.

On platforms, there may be some synergies to be had.

Private equity firms will invest in a different way to previous shareholders that were invested for longer, and will invest in a typically private equity way: it will be ruthless, it will be targeted and it will be designed to ultimately return a set percentage to their shareholders.

To be slightly controversial, and to come back to the issue of replatforming, what I don't understand is where any private equity business, whether that's for an advice firm or in the platform space, voluntarily does a replatform. They must know something the rest of us don't.

If your approach is to voluntarily do a replatform of something that's fundamentally working, it's going to be tough.

However, while there are a lot of case studies that would paint being private equity-owned in a negative light, there are also lots of prime examples of firms that have done nothing but benefit from private equity ownership.

Take FNZ for example, or Intelliflo.

If you were to ask Intelliflo chief executive Nick Eatock about his previous owners, he's got nothing but good things to say about them because they invested substantially in the business.

They moved the business from twice yearly releases to production releases every single day, and pushed the software to being cloud hosted.

I’m not saying this to try and sell Intelliflo to anyone, but I do think there are lots of case studies in our sector of really good private equity investment.

That’s because they know what they want to do, they're ruthless in the execution of it and they generally need to improve the businesses from when they bought them. So while private equity potentially comes with a different set of drivers, I don’t think it's necessarily a bad thing.

Change and consolidation

It’s fair to say platforms and advisers have had to deal with a lot of change in recent years.

We’ve got a really good relationship with the FCA, and while not everyone would agree, I think it’s actually been tough for the FCA to regulate during a pandemic.

They’re working from home the same as anyone else – our supervisor’s cat frequently runs across her desk at home!

Admittedly it has held up things like change of control and approvals, so I think the FCA has a fair chunk of items to get through that were already on the agenda.

We’ve recently seen the consultation process continue around property funds, and if those proposals are introduced and property funds are deemed as unsuitable in future for retail investors, that will have a profound effect on the market.                                                                                                                                Elsewhere, I’m not expecting big regulatory change, but you never know. You’re only ever one Budget away from the government doing something with pensions again, just because they can.

Away from regulation, I think the consolidation we’re seeing in the advice sector is interesting.

When I started work in the mid-1980s, there were 250,000 what you would call independent financial advisers. I think we're down to about 30,000 now. And it is creating this advice gap that I talked about earlier.

I've got a friend who’s got about £100,000 invested. She’s in her 50s, doesn’t understand pensions, and can’t find anyone to help her and give her advice. So where does she go?

I think consolidation in the advice market will continue. Advisers want to retire, and we need more advisers coming in, which is why we're launching an academy to train more advisers.

But consolidators will have to tackle their own business priorities.

If you buy 100 different companies, at some point you're looking at having to do some kind of integration. Those companies probably have 20 different platforms, with three or four different back-office providers.

Consolidators are probably going to need to do quite a lot of engineering in those businesses to get them to be more of a single operating unit, rather than 100 different firms.

Getting to ‘frictionless’ transfers

One area we’re working on is how we can improve transfers, and how we can engage better through back-office integration. That’s something we’re working on closely with Altus at the moment.

We’re also looking at things like more modular solutions and some of the software Bravura has to offer.

Essentially, we’re looking at some of the architecture and the way the platform operates in order to make it play better with other providers, and just really smooth out the transfer process.

I speak to others in the platform world on this, and it’s still frustrating how long it takes to move money around the industry. It’s frightening.

I’d argue platforms have to get there with this, with more open standards so that money can move more freely. I think it should be frictionless.

When we started Novia back in the day, Bill Vasilieff, Shaun Allwright, Paul Boston and I sat down and said it should be as easy to put money on this platform as it should be to take it off. I still believe that.

Platforms have always been really good at taking money in, but they are less good at transferring it away. It needs to be frictionless.

There's a customer at the end of it, and the customer doesn't want to be out of the market.

This is often their life savings we’re dealing with, and there's that fear that if they’re out of the market for 10 days, they start thinking: where’s my money?

They can't see it on their old account because it's gone, and they can't see it on their new platform because it's not there yet.

As an industry, we just need to do a much better job of moving money around much faster, and providing more transparency around the whole process.