It takes 3 to tango

Nucleus has been taken over by James Hay

Some of you have been following the run of events since it was announced in December that Sanlam had effectively put Nucleus up for sale. Several bidders came forward and in the final reckoning, a competitor platform has sealed the deal. Changes will undoubtedly follow, but for now we are sure it will be business as usual.

The news has even prompted a client to ask if we will be made redundant, which is a worry if he thinks we work for Nucleus! Nucleus works for us!

Fiercely Independent

If you cut our business in half, running through it like the letters in Blackpool Rock, it would read “Fiercely Independent since 1997”. Nobody owns us and nobody ever will. My central belief is you cannot offer independent advice to clients unless you are totally free to do so.

A la carte

Now’s a good time to reiterate how we function and describe all of the moving parts. It won’t take me long, there are only 3 parts. Let me use an analogy, (nobody saw that coming!) I’m the chef – again anybody who knows me well understands that I am in reality as far away from a chef as is humanly possible – but let’s stick with it.

  • Chef – Yours truly.
  • Diner – played astonishingly well by you.
  • Supermarket – played currently by Nucleus. Also A.J.Bell for specific property related investments.

Your role is to invest and then ultimately spend as much of your life savings as is possible in your lifetimes. My role is to recommend the most advantageous tax wrappers (plans) to you – and – to ensure your life savings remain safe and grow at a rate commensurate with the amount of investment risk that you are willing and able to take. The supermarket provides the wrappers and holds the assets that have been chosen for you by me. Crucially the supermarket must offer me an unfettered selection of investments. we want the finest ingredients and if they don’t offer them, our independence ensures I’m free to purchase them elsewhere. We are free to switch supermarkets.

Ready meals

As an aside the alternative is like a ready meal. Providers like the banks and St. James Place as one example, offer ready meals. Convenient, pre-packaged, but I must say, packed with the sort of ingredients that don’t make sense if you are trying to maximise on the long term growth potential for your customers, but pretty effective if you want to maximise short term growth for your shareholders. If a decision is made to substitute any ingredient on the basis of cost, a customer has no say, they get what they are given.

The supermarket

This is the role that has predominately been held by Nucleus since late 2007. They have offered a first class service generally and my expectation is that will not change in the short to medium term. But they are now “Under New Management”. I will continue to review the situation, but now we crucially have no way of influencing their future direction by attending their development group. The direction from here will be to the benefit of the venture capital business that is stumping up the £1.88 per share.

If your household generally buys the weekly shop from Asda you probably didn’t know that it has long since been owned by Associated Dairies (where the name came from) and has recently been sold by Walmart to the Issa brothers from Blackburn, backed by £6.8 billion of capital from venture capitalists TDR Capital. So in many cases who owns a business isn’t important as long as the business continues to deliver value.

It’s only software

I suppose Nucleus is more like the Ocado of the supermarket world, no stores – all online. Thankfully there are many other Ocado’s in the financial services market if Nucleus ceases to continue to keep its service standards. As my last blog said, I’m currently trialling Transact and so far am pleased with the price and investment selection. The on-line experience is good, if not as simple as Nucleus, but the paperwork required is just plain inefficient. Nobody gets everything they want.

….and two come at once

Look out for the quarterly update due any day now. The year has been a poor one for many of us personally, but the pandemic hasn’t damaged our life savings, it’s looking like just a blip along the way already.

2 Replies to “It takes 3 to tango”

  1. Howard
    Thanks for your update short and nearly sweet but let’s see what the next few weeks bring.
    My only concerns short term is the paperwork and fees that will come into play and whether we/me need to look closer at the future? As l move forward into my last few years of work l more than ever need the buffer that your company has given me with my finances.
    As it’s been a while since we had a meeting can we look at our diaries to get together soon
    w/c 19/4 ? Please advise


  2. Hi Ted

    I suppose I should have mentioned that if we need to move any client between platforms we will complete all of the paperwork free of charge. If Nucleus fees rise (I doubt they will) we have a choice and will move all clients. We will be watching closely. I will ask Melissa to contact you and pop a time in the diary.

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