Nucleus acquisition signposts platform market direction

12 February 2024

Nucleus’s announcement of its acquisition of Third Financial, points at the direction of the financial advice platform market, according to Ian McKenna, founder of Financial Technology Research Centre (FTRC).

Third Financial is an investment platform and front-to-back wealth management software provider, serving discretionary wealth managers, multi-family offices, and adviser consolidators.

The business has delivered strong organic growth in recent years, with revenue increasing by more than 30% in 2023. It has over 50 clients in the UK with £6bn of assets under administration on its platform and a further £40bn of assets administered via its software system, Tercero.

The acquisition will enable Nucleus to extend the platform solutions it offers advisory firms of all sizes. It will benefit from Third Financial’s proprietary technology, enabling an ‘adviser-as-a-platform’ proposition to meet the needs of larger businesses who want to offer their own platform.

Ian McKenna says: “The acquisition of Third Financial by Nucleus says a lot about the current state of the platform market. It looks like a very smart move.

“Platforms are currently polarising between traditional platform providers who operate at arm’s-length to advice firms, and “advice tech as a platform” (ATP) propositions that prioritise deep integration between the platform and the technology advice firms used to run their businesses.

“While not a new concept, True Potential and Benchmark have been operating as ATP services for over a decade, and there is growing evidence that it is the preferred solution for larger adviser firms.

“This deal will give Nucleus a foot in both camps and potentially puts them in a stronger position than most platforms to respond to initiatives like the Wealthlink relationship established between Intelliflo and SS&C last year and other ATP solutions like Seccl.

“That said, there will need to be further work to carry out deep integration between Third Financial and various adviser technology propositions, including the leading practice management systems, financial planning solutions, and others.

“The move will almost certainly trigger further interest in key advice tech providers from establish platforms. The reality is that there are not enough to go around, and I wouldn’t be surprised to see more substantial M&A activity.”

The acquisition is subject to regulatory approval.

Professional Paraplanner