Interview: David Ferguson, Nucleus Financial Group

An eye for innovation has put David Ferguson on the road with Nucleus Financial Group. Picture: Jane Barlow
An eye for innovation has put David Ferguson on the road with Nucleus Financial Group. Picture: Jane Barlow
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THERE’S a fair chance David Ferguson spends more time than most having to explain precisely what his business does. Nucleus Financial Group, the Edinburgh-based company he founded in 2006 describesitself as an adviser-built online wrap platform – a label that is likely to cause some head-scratching among the uninitiated.

Ferguson, who is chief executive, offers a jargon-free alternative. “We are basically a website where financial advisers can look after clients’ money better,” he says. “They can see everything in the one place and are more likely to make a judgment on how you should invest your money and how you should plan your life.”

Wraps are a relatively new phenomenon in this country. Originating from Australia, they came to the UK around the turn of the millennium and have grown in popularity, mirroring the internet explosion and onslaught of the smartphone and tablet.

The ability to manage multiple pension plans, assets and investments via a single, secure web-based service is clearly appealing in a 24/7, always-connected world. For swathes of the traditionally staid investment and insurance industry it has come as a rude wake-up call, with regulatory change, such as the recent retail distribution review, accelerating the migration to wrap services. There’s talk of the sector being worth as much as £500 billion by advised assets under administration by 2015, getting on for double the present size, though doubters say the fizz may yet come out of the market.

Nucleus, which has grown from a three-man team in a serviced office basement to a headcount of more than 100, boasts a decent slug of that business. Its recently-released first-quarter numbers showed the total value of assets held on its platform passing through the £7bn mark. The firm has been profitable for the past couple of years, with the pre-tax haul in 2013 hitting £1.5 million.

“Wraps and platforms are changing the life industry,” argues Ferguson, “though it will take ten years to play out. The sector has taken a lot of costs out of this industry.

“For many people it is a step change. They find they have money that they didn’t realise they had. By having access to it in the one place you are much more likely to makeinformed decisions about it.”

A self-confessed “tech geek”, Ferguson started out on his career path as an actuary, having read actuarial mathematics and statistics at Heriot-Watt University. He cut short his studies for the Faculty of Actuaries, pushing out into product development and marketing roles at Ivory & Sime and Scottish Life, respectively. It was while at the latter that he initiated the thought process for Nucleus, though it was eight more years before he raised the money and took the plunge.

Eight years on from pushing that button, the “incomplete actuary” – still in his mid-40s – has lost none of that initial passion.

“It’s a lot more fun now than when we were losing money every month,” he says with a laugh. “We should be an £8bn business [by administered assets] this year and it’s now a question of how we get to £15bn, £25bn, £35bn. The oldest person in management is about 46, so we are not a bunch of guys that are looking to exit any time soon. A stock market flotation is a possibility at some point. However, we are not running the business to sell it, but to grow it and besuccessful.

“For six of the past eight years we were either losing money or just about breaking even. We feel we are kind of proven but not the finished article just yet.”

Bringing in a managing director, Stuart Geard, towards the end of 2012 has helped the Nucleus boss improve that critical work-life balance. Ferguson points to complementary skill sets and labels himself the “big picture guy”.

He reflects on the early days of the venture when it was all about “ridiculously long working hours, going to the pub and waking with a hangover most days”.

Having a little more down time has allowed Ferguson to see a bit more of the world beyond wraps, Isas and IFAs. He is married to South African-born Monique, and confesses to taking a “disproportionate” number of holidays to her home country, along with young daughter Nicole.

“It’s an interesting place,” he observes, though the urban sprawl of Johannesburg is “not for the faint-hearted”.

Ferguson, also a follower of the “mighty” Heart of Midlothian FC, adds: “Monique does not yet possess a British passport so if you want to go anywhere you have to visitLondon to get a visa.”

In spite of that red tape handicap, there have also been trips to such far-flung destinations as Vietnam and Mauritius, the latter described as “stunning, even if it broke the bank a little bit”.

The marriage has seen Ferguson eschew the morning lie-in. “South African people keep very different hours to us, so these days I get up about 6am and play with my daughter for an hour or two,” he says. “Early nights now tend to be the drill. It does mean that when you do have a big night out you are left effectively jet-lagged.”

The job entails a fair amount of travelling, too. There are now some 400 firms offinancial advisers using the Nucleus platform with about 75 of them shareholders in the company. Meeting those clients takes Ferguson from Exeter in Devon to themore remote reaches of Scotland.

He also has to find time to help nurture fresh talent, with people forming the “lifeblood” of the business.

“We are investing a lot more in our staff and thinking about who’s going to run what team in five years’ time. People in this industry are as portable as they want to be.

“Thankfully, there is a big talent pool here in Edinburgh. We have picked up people in their 20s that want to do something more interesting and like the culture at Nucleus. My desk sits in the middle of the office, so hopefully people find me approachable.”

He adds: “We are over 100 people now. I would know everyone by name though I might not know every partner’s name or the name of their dog.”

Six years away from his half-century,Ferguson has a philosophical outlook.

“One day I’ll either leave or get fired,” he jokes. “That’s what happens in life. But I certainly hope I would exercise the formerbefore I got to the latter.”