Tech challenge
The main challenge for his peer group is always going to be technology, he says.
“Many firms have to get better. Many are trying to build or switch providers now. Our technology works fantastically – about 90% of the business that comes to our platform goes straight to the back office; we never touch it.”
Vasilieff says the less human interaction the better: “The only way you can get money in this market is to get the technology working for you, good quality staff handling the interface, with as little as possible administration done by hand.
“When people start getting involved they tend to make mistakes.”
Respecting advisers’ need for open architecture, Novia currently has relationships in place with around 60 DFMs, but he says some are not writing much business, seemingly resting on their laurels once a distribution deal is struck.
With a helicopter view of each of their operations, what advice would he give those DFMs struggling to grow assets under management? “If someone thinks they are going to just put something on to a platform and get business without doing any more work, it is not going to happen,” he stresses.
“The ones that get the bulk of the assets are the ones out there, meeting IFAs and saying, ‘Look, you can get into one of our model portfolios on A, B and C platforms’ – really promoting their offerings.”
Market leader
With £3.7bn of AUM, Novia has led the charge on several industry initiatives, including the conversion to clean-share classes ahead of the sunset clause in April last year. It also has a track record in building platforms for other contenders as it did for Aegon UK, before selling it as Novia Investment Services in late 2013 to run its in-house offering for £7m.
Confident in his own experience, which took him from M&G to co-founding Selestia (then part of Skandia) before setting out his own stall with Novia in October 2008, Vasilieff would do it again. “Why not? Our team is by the far the best at building platforms, getting them to market and making them work,” he says. “We have done it three or four times and they work. I think there is a core skill that we have in the team and we would definitely do it again if someone came to us and asked us to build them one.
“Aegon now has a retail, corporate and direct-to-consumer platform at a fraction of the cost than if it had not used us.”
Cost is always a sensitive topic. The term ‘price war’ is a theme omnipresent across trade press headlines as competition and technology solutions gain pace in the platform sector.
Often platforms are criticised for their pricing models, with some commentators arguing that flat fees are superior – or cheaper – than percentage of assets-based charges used by Novia. Vasilieff defends the firm’s pricing model.
“For the £50,000 or even £100,000 client, we are much cheaper than flat pricing. Even if we charged the same as the darling of flat pricing [believed to be Alliance Trust Savings], we would make more money than we do currently. Flat pricing is not cheaper – that is a myth. We would make more money even if we put flat pricing across our whole portfolios.”
Pricing models
Yet Novia chooses not to venture down the flat pricing route. He says that by being able to provide services for clients of all segments – whether they have £10,000 or £100,000 – means Novia can offer services for less, which is helped by a cross-subsidy across the market. “We probably would not get value clients if we went onto flat pricing, and also every market in finance almost charges by basis points.”
Having recently introduced Investor Zone, a graphic interface that offers clients and advisers a consistent user experience, promoting Copia and launching Novia Global, a multi-currency platform for advisers focusing on offshore markets last year, you might think Vasilieff would have his hands full. But not quite.
So what is his end game? “With around a three-year timespan, we will probably be looking to list the business via an initial public offering. That is not to say we are selling it, but just trying to create a market in the shares to give all the investors an opportunity to get some money back out.”
