Changes to the Nucleus platform, and what they mean for you
Here’s the headline: Nucleus, our investment platform, is currently in the process of being acquired by the James Hay Partnership (“James Hay”), which is another investment platform provider. If your investments are held on the Nucleus platform you will have recently been notified of this fact. But, what does it really mean for you?
What is an investment platform anyway?
As background, it is worth revisiting where the investment platforms have come from. An investment platform is essentially an online service which allows you to buy, sell and hold funds. Over the past 15 years, a number of these platforms have been created and have grown significantly, as advisers started to favour them more than traditional insurance companies, such as Standard Life or Prudential.
Platforms have become very popular over the years, as they can be a tax efficient way to hold investments. It’s possible to gain access to a wide fund range, which can sometimes be offered at a discounted rate. Having online access also allows you to view and monitor the progress of your investments at any time, which is a great benefit to many clients who like to keep an eye on things.
They also provide streamlined administration, access to funds and, importantly, ever-reducing costs. When stakeholder pensions came out, their capped product and investment fees were 1.5%. At the time this was deemed to be low cost, whereas now the cost of a pension on an investment platform ranges between 0.4% and 0.75%, depending on investments. Everybody has benefitted from the reduction in costs, and service levels have increased dramatically.
Sounds great! So why the acquisition?
Popularity drives many products to market. The platform industry is now very competitive and has responded to this busy market with a period of consolidation, which is driving the merger of platforms. The cost of investing using an investment platform is being driven down further as a result, and this is the background to the proposed acquisition of Nucleus by James Hay.
James Hay was purchased by a private equity company called Epiris in 2019. They are now acquiring Nucleus with the intent to combine the two businesses into one larger company, which can better compete in a market that demands lower platform costs.
As it stands, this is good news for Nucleus users. We are hopeful that the existing team at Nucleus will play a large part in the future of the new business so that service levels continue to reflect the high standards we have come to expect.
Will anything change?
The merger will include decisions on underlying technology, and possibly name, which could create some change – but, as always, we will monitor the situation and keep you informed.
The most important things to note are that your money and investments are totally safe, and that the new business operates within the same regulatory framework that protects you. There are no changes to the way that we invest your money, as this is under our control at Goodmans – the platform is just a tool. There appears to be no need to take any immediate action, and we anticipate that Nucleus users will benefit from the increased scale of the company.
However, if you do have any concerns or would like to know more, please do get in contact with your FP and we can talk it through.