Hertfordshire-based IFA Lumin Wealth Management made its first acquisition this year with the help of platform Ascentric, New Model Adviser® can reveal.
The Royal London-owned platform set up an initial meeting between directors of Lumin Wealth Management and Luton-based Hyperion Financial Planning.
Directors of Hyperion approached Ascentric when they decided to sell on the condition that firm buying used the same platform. Lumin Wealth Management, which featured in the New Model Adviser® Top 100 last year, fit the bill.
‘We found out about them through the platform,’ Lumin co-managing director John Cusins said.
‘They thought it would be helpful to them if the person who bought their business had similar platforms, so that their clients wouldn’t have to change platforms. They asked Ascentric to make some introductions to people who were on Ascentric who might be interested in talking to them.’
Cusins said that setting up acquisitions was not something Ascentric had made a habit of – the deal was the platform’s first as a matchmaker, though he added that it was likely that platforms would continue to do this sort of work in a bid to keep assets on their books.
‘Everyone’s thinking about this, because it makes a lot of sense. If someone not on Ascentric had acquired them, the assets would quite possibly have left Ascentric.’
A spokesperson for Ascentric said that it was not launching a wider matchmaking service at this stage.
‘We were asked to help set up an introductory meeting but we were not involved in any commercial negotiations,’ they said. ‘We have no plans to turn this into a service.’
Other platforms have helped advisers buy other firms. In 2017 Transact set up Vertus Capital as a matchmaking service for its users.
In February this year, New Model Adviser® revealed that support services provider SimplyBiz was devising a service to match member IFAs looking to sell their businesses with possible aquirers. The service will focus particularly on the geography of member firms, to ensure that clients are provided with the same degree of personal service.
Ascentric may have no plans of their own to do this sort of thing regularly for its adviser clients, but one broker believes the strategy could become more common practice.
‘Firstly it’s very odd, [because] if sellers start putting in caveats then the buyers will start looking elsewhere. It sounds to me like Ascentric have got the nod that the seller is looking to sell and have decided to do their own internal pitch to keep it on their platform,’ said Peter Trotman, consultant at brokerage firm Vision Business Advisers.
‘It’s not the first time a fund house has tried to push a seller to another client of theirs, it’s very common in the networks, sometimes at the detriment of the seller – [with the] usual pitch of “well, if you sell outside the network you may not get all your recurring income transferred.”’
Trotman cautioned that if these services do become more popular the regulator may take further interest in how platforms are setting up deals. As New Model Adviser® revealed in 2017, the Financial Conduct Authority included questions about loans to advice firms in its platform market study.
‘I can see this happening on a more regular basis. [It’s] putting the frighteners on to keep the funds on the platform or within the network. Whether that is treating customers fairly is another question,' Trotman said.