Nucleus now just "weeks" from profitability

Nucleus CEO David Ferguson has revealed the IFA-owned wrap will be profitable in a matter of weeks and says February has been a stand-out month in terms of inflows.

Ferguson also says three new adviser firms will sign up to the wrap next week taking the total number to 63.

Reaching the profitability mark of around £1.2bn will come a little over three years since launch and the Nucleus chief says the landmark is particularly impressive given its low-cost offering.

"We are the lowest cost wrap in the market and to be in a cash position in the first half of the year will be great," he says. "We might have reached profitability in the first quarter had the markets not wobbled."

"This month will be the best ever month in terms of inflows and there is a real sense of momentum as we get more adviser firms on the wrap."

Nucleus charges customers 35bps to use the platform and Ferguson says it is likely this will be reduced as the drive to transparency places downward pressure on prices.

Skandia recently drew up a 50 basis point business plan on the premise costs will be contained and profits made within 50bps of funds under management.

"I think sustainability can be reached at a lower margin than 50bps," says Ferguson. "But Skandia is at an interesting place and I hugely welcome what it is doing in regard to with-profits."

Product wise, Ferguson says Nucleus is considering developing a maximum investment plan. 

"Although not a top priority, we surveyed some IFAs and there appears to be some appetite for it."

Ascentric and Transact recently launched modern versions of the old fashioned savings product.

He also reveals Nucleus is looking at developments in the corporate wrap market.

"I suppose we are fairly cynical about corporate wraps, but having said that I think wraps will come to play a part in the corporate pensions space."

The Nucleus head thinks a "new world" is emerging as different business models emerge and a fresh breed of qualified, forward-looking advisers enter the fray.

He thinks different platforms models will battle for superiority in 2010, with the RDR-compliant wrap emerging as victor.

"The dividing lines between the wrap and fund supermarket are becoming clearer," he says. "Supermarkets are a distribution method for funds paid for by fund managers and wraps are an administration service for IFAs paid for by clients - the business models are completely different."

Sanlam, which is currently pursuing an expansion strategy based on partnering 40 IFAs, has a 42.5% stake in Nucleus.