Brexit, birthdays and buy-outs…

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THU, 19 DEC 2019

We can all agree that parliamentary chaos and the ensuing bumbling around Brexit created an extended stint of market uncertainty. This has undoubtedly impacted investor sentiment and resulted in lower inflows and growth across the platform sector, in a way that we’ve not seen for some time.

But amidst all the doom and gloom there was still some celebration to be had!

SIPPs turned 30. Back in March 1989 the government pledged that the SIPP was the answer to making it easier for people in personal pension schemes to manage their own investments. However, the ultimate flexibility – pension freedoms – really took 26 years to come to fruition.

Whilst fears were voiced of SIPPs being encashed left right and centre, and Lamborghini dealerships bursting at the seams through an increased demand for pension funded supercars, this didn’t turn out to be true.

SIPPs remain at the heart of investors’ plans for managing wealth through the second half of their lives.

On the topic of birthdays, we too celebrated a milestone of 40 years at the forefront of retirement wealth planning. We’re famous for SIPPs and we’ve paved our success by having a rich retirement planning heritage – we’re the experts, the team that does the hard stuff very well. There are few firms in our space that can lay claim to a heritage like ours, so it was great to celebrate the year with where we’ve come from and importantly where we’re going as a business.

Which leads nicely to the final hot topic of the year…buy-outs.

Consolidation has been talked about almost constantly for ten years, but 2019 was the year buyouts really started to change the platform landscape.

For some legacy providers it used to be all about scale, arguably at the expense of service, and we’ve seen how the patience required for that model has worn thin. Separations and sell offs have ensued, with some attracted to buying back books of platform assets in a move to keep accumulating AUA.

However, a slightly different trend rose to the forefront in 2019, with private equity money being drawn to the success and further potential of the platform market. We can talk first hand to this, as in September 2019, private equity firm, Epiris, acquired our parent company IFG Group. Our new owner sees our potential and is keen to accelerate the growth of James Hay by investing in the development of new products and improving operational processes and experience.

Private equity firms coming on to the platform scene with investment and fresh thinking can only be positive, illustrating it’s an increasingly attractive space for innovation and growth. The consolidation chatter will likely continue into 2020, but the question will be what type of consolidation we will see next year; further competitor consolidation, more private equity firms breathing life into the market, surprising technology team-ups, or something completely different? A wider industry ‘2020 vision’ with not much clarity, oh the irony!

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