Colonial First State taps FNZ, backed by Al Gore, for platform shake-up

Colonial First State is joining with FNZ, a firm backed by former US vice president Al Gore’s investment group, to overhaul part of its platform business.

Former US vice president Al Gore’s Generation Investment Management is a one of the backers of FNZ. Picture: Britta Campion

Colonial First State is joining with FNZ, a firm backed by former US vice president Al Gore’s investment group, to overhaul part of its platform business and seek out growth and acquisitions.

KKR and Commonwealth Bank owned-CFS will on Thursday announce the appointment of FNZ as a new wrap platform provider, as it also moves to replace technology underpinning its current wrap platform.

Platforms hold investments, such as managed funds and shares, in one place and are typically used by financial advisers and individuals for centralised reporting. When investors have direct ownership of their investments, wrapped in one administration system, that sits on a wrap platform.

CFS superannuation chief Kelly Power said the wealth group wanted to “shake up” the market through its commercial arrangement with FNZ.

“We really wanted to contest this space, we see it as a big opportunity,” she added. “As part of that, we’ll be working with FNZ to look for opportunities both to acquire other platforms, but also to support advisers as well in transitioning their business onto the platform.”

Mr Gore’s Generation Investment Management, Canadian pension fund Caisse de Depot et Placement du Quebec and Singapore’s Temasek are large investors in FNZ, while employees own 30 per cent of the company.

Former MLC boss now Koda Capital chairman Steve Tucker sits on the FNZ Asia Pacific board, which is led by former AMP non-executive director Trevor Matthews.

FNZ — which counts Barclays, Vanguard, Aviva and, locally, Findex among its 150 financial services customers — has more than $2.1 trillion under administration. CFS’s funds under administration amounted to $156.8bn in December.

The FNZ tie-up comes as Westpac prepares to sell its platform unit and follows industry rationalisation domestically after its major rivals sold out or reduced their exposure to wealth management.

Colonial First State’s Kelly Power says the firm and FNZ are working with financial advisers to design the new platform.

CFS became a stand-alone business in December after CBA completed the sale of a 55 per cent stake to KKR.

Ms Power noted CFS wanted to step up its presence in the wrap industry, given it was already a sizeable player in the master trust space.

“We’re in a really good position, with committed supportive shareholders, we’re a stand-alone business … we’ve got a clear mandate to grow and to invest,” she said, declining to comment specifically on interest in Westpac’s platform arm.

Westpac is in the process of selling its BT superannuation unit ahead of starting an auction for its platform division, which has funds under administration of $139.3bn.

Ms Power said CFS had started working with FNZ, about 10 financial advisers and key licensees to design the new platform, and it was expected to open to new business in late 2022.

CFS undertook detailed due diligence on FNZ in the last six months, to assess data security and other technology and functions under FNZ’s platform-as-a-service model.

“That included having independent assurance … we had our audit partner also have a look at the security of the platform. So we have a lot of confidence in FNZ,” Ms Power said.

CFS expects the tie-up will boost the competitiveness of its platforms and deliver a better experience to customers and advisers. The partnership includes a deal to distribute the wrap platform to new CFS customers.

Tim Neville, FNZ Asia Pacific’s boss, said: “With CFS, we look forward to delivering a market leading proposition, which will help to accelerate growth, drive innovation and enable personalised advice and wealth management solutions.”

CFS – which is chaired by former Westpac executive Rob Coombe – in December outlined a plan to invest more than $430m in the business over four years, to upgrade legacy technology, systems and services.

Ms Power said the FNZ partnership and new wrap platform would account for about 15 per cent to 20 per cent of the slated $430m investment spend.

Separately, Ms Power said given a string of changes made to CFS’s MySuper product — including fee reductions and an investment manager change — she was confident it would pass the next regulatory performance test.