Tech Review: Nucleus

Mark Loosmore of AT8 continues his platform rounds with a visit to Nucleus Financial Group, where he finds a firm that prides itself on user involvement.

Nucleus has a very different flavour to most platforms we have reviewed. Some of this is appearance (a very modern but back-street office, with Apple iMacs on the desks). But this modern brand is driven by a dynamic organisation that aims to align itself very closely to the IFA and the client, and works hard to differentiate itself from provider-owned platforms.

Nucleus’s target market is niche, but clear. Indeed, it is selective in the type of IFA with whom it wants to work. It makes no attempt to be a mainstream platform that can help transform the business models of IFAs, but is looking to work with IFAs that know where they are going and have already transformed their businesses.

Nucleus judges IFAs to be best positioned to determine how to change their business. The particular target segment is, in part, out of necessity, because Nucleus does not have the capital to invest in teams of consultants to guide IFAs through changing their business strategy. It is also through design: creating a cost-effective business by focusing on a particular market segment enables it to achieve a cost-efficient proposition for this segment by not carrying the costs necessary to serve a range of other segments.

User community

This focused approach permeates through the organisation. Nucleus does not claim to be an expert in financial advice, nor in fund management: it is a utility to be used by IFAs to drive administration and trading efficiencies.

The user community is very alive and active. There is a platform development committee, an investment committee and a practice development committee. Each is staffed and run by the IFAs and each has a strong influence over the direction of the Nucleus platform. Indeed, Nucleus prides itself on the involvement of users and developing the functionality its users prioritise.

Because so much of the emphasis of Nucleus is its alignment to IFAs we thought it would be worth talking to Tina Weeks, its newest member and director at Serenity Financial Planning. Weeks signed with Nucleus this month. Finding a platform partner that focused on businesses like hers was an important factor. She welcomes being able to communicate with Nucleus via telephone, email or even Twitter, rather than relying on the post.

One might expect that using the system for the first time would be fraught with teething problems, as the user adjusts to the new interface and functionality. However, she described the process as “a joy”. The case submission was easy, following a clear step-by-step process, and paperwork was minimal.

IFAs who decide to use Nucleus are not just choosing a platform; they are making a business and an investment decision. They have to buy shares in the firm as an illustration of their commitment, the minimum entrance level being £15,000, but some have invested much more. Its users/shareholders are loyal and have recently supported a round of financing that raised £15m to wipe all debt from the company balance sheet.

At the moment, it is trading in the red, although it was profitable at the start of 2010, before it undertook a more aggressive expansion plan. Chief executive David Ferguson aims to have the company back in the black before the summer. In reality, because it has run its business in such a focused manner its cost base is low, so its finances are quite predictable. Assets under management have grown to £2.3bn, and it now employs 45 people. With the refinancing last December, it is poised for growth.

First impressions

On first sight, the system is pleasing and easy to follow. It is well structured: clearly labelled tabs are used to navigate around the system and ‘breadcrumb trails’ are used to ensure the user knows the point at which they are in the process. The home page is actively used to communicate with members.

Key announcements, such as new funds being made available, process changes and events are announced here. There is also access to an online newsletter that shares the views of the Nucleus team with its partners. A live chat is available on the home page where a user (be it adviser or end client) can link to a client relationship manager to ask for help and advice. The breadth of the solution is narrower than some of the bigger players, and the focus is on setting up portfolios, trading and reporting on assets.

The process of setting up standing data and populating new registration forms is often done with spreadsheets. For me, the use of a different technology broke the appeal from the smooth automation that was presented initially. Form-filling through the use of spreadsheets is a cost-effective way to launch a solution, and the validation in the forms through the use of macros is sufficient to ensure the data entered is accurate.

However, it does contrast from the clean and visual simplicity of the rest of the system, as much of the dynamic nature of an electronic data capture process is lost (you see all of the form all of the time, rather than having dynamic ‘hide and show’).

Another concern is the level of the pre-population of the forms is poor. Customer data held in the system isn’t carried forward to the forms, so the data has to be re-typed. However, we have been told this will be resolved in the Q2 2011 release.
The reporting facility is comprehensive and the list of report types is vast.

Each report is clearly laid out, and the branding of the reports is modern and professional. The reports include data exports to the major back-office providers. The list of reports is continually being extended, usually at the request of users, with Nucleus living up to its promise of listening to its clients’ needs and delivering the reports they require.

IFAs: choose your tools

Several sets of tools are provided to help IFAs manage their portfolios. These include illustration tools, bulk switching, registration, model portfolio analysis, and charting and setting up alerts. What it doesn’t include is the financial planning type tools. It doesn’t claim to offer CRM technology, risk questionnaires or asset allocation tools, keeping its focus and costs to a minimum.

The alerts are worthy of further mention as they are both in the system and can send messages via email. A message can be triggered by one or more of many events in the system, such as a trade being placed, confirmed or settled, transfers applied for, pending, or completed, fees paid, and cash account balance levels.

Nucleus appears to be on a mission. It differentiates itself clearly from the market, and its approach, marketing and philosophies are very different from the large product provider solutions. Those IFAs already aligned to the RDR and taking the issues identified by the FSA with single-platform solutions will already have the financial planning tools independent of the platform. They simply need an efficient way to manage and administer clients assets, and Nucleus is an attractive and cost-­effective solution.