Aviva’s platform fell short of plans to make its platform business profitable in 2015 due to investment in its direct to consumer proposition.
In 2013 New Model Adviser® reported Aviva expected its platform to be profitable by 2015.
However financial statements filed at Companies House show the two companies which contain Aviva’s platform businesses both recorded substantial losses in 2015.
Aviva’s platform is spread across two limited companies called Aviva Wrap UK and Aviva Pension Trustees.
Despite recording net inflows of £3.2 billion in 2015 and boosting assets across platforms to £8.4 billion in 2015, both companies posted losses as a result of investing in a new direct to consumer proposition.
Aviva Wrap UK, which administers the investment business on the platform recorded a pre-tax loss of £16.3 million in 2015. This compare to a loss of £1.3 million in 2014.
Aviva Pension Trustees, which administers pension business on the platform, recorded a pre-tax loss of £17.4 million in 2015, compared to a loss of £1.4 million.
The life company’s platform attracted £3.2 billion of net inflows in 2015, which boosted assets across the platforms to £8.4 billion.
An Aviva spokesman said the huge loss for the year was due to the initial and subsequent investments needed to launch a direct to consumer platform:
‘In 2015 we made a considerable investment in the development of our direct-to-consumer platform, which launched in June 2015. This is reflected in the accounts.
‘The launch of the new consumer platform means that Aviva is able to serve customers whether they wish to do business via a financial adviser or whether they wish to manage their own finances,’ he said.
However, the company will now need to invest in its second platform project in as many years as it announced this week it will move its adviser platform over to FNZ:
‘We remain strongly committed to the adviser market, as evidenced by our announcement this week of our intention to invest further in moving the Aviva Adviser platform to FNZ as we look to further grow our business,’ said a spokesman.
Previously Aviva used OpenWealth which is owned by Genpact and uses Bravura technology for its adviser platform.
As the D2C offering has been built with FNZ the move away from Genpact will serve to consolidate the platforms.
Abraham Okusanya, director at consultancy firm FinalytiQ which publishes an annual report on platform profitability, said the technology move would create more questions for Aviva in the long run.
‘Aviva wrap sits on two limited companies. When you put the two together they have probably invested around £30 million into the new [D2C] platform business,’ he said.
‘Now they are looking at another £30-£50 million to get them on the same technology platform. The question is how sustainable is this in the long run?’
Source: New Model Adviser