Standard Life has certainly put together a seductive argument to advisers as it announces its direct-to-consumer proposition. Such launches have traditionally raised advisers’ hackles and even in a changed market, there is no doubt ample opportunity for offence.
Yet Standard calmly makes the case that advisers simply cannot advise too many clients nor reach a big swathe of consumers.
It says the number of clients per adviser is falling from roughly 450 for a general practitioner adviser to roughly 150 higher value clients. This is partly because advisers definitely have to do something service-wise to justify their trail, but also because trail will effectively become extinct due to the legacy platform rebate ban that becomes effective on April 2016.
Standard says some advisers have yet to realise that this is a clear consequence of the rebate ban. We are in the twilight era of commission certainly when it comes to investment.
But as well as constructing execution-only services perhaps joined to its auto-enrolment book of business, Standard says, with something of a flourish, it will then pass on customers who want and need advice and have gathered together enough assets to financial advisers.
We are in the twilight era of commission certainly when it comes to investment. John LappinIf it meets this commitment, then Standard will surely be getting more of a hearing come the next beauty parade. Advisers need to interrogate this offer. How does it work? Do they have to be using Standard for the majority of their business?
The company does address one concern – that advisers are not reaching new investors. A lot of the new execution-only services from advisers are designed to help them play a role in accumulation as well as more lucrative capital preservation and retirement planning.
But what if a big financial player could do the heavy lifting, while you as an adviser concentrate on advising the asset rich? Of course, it will be interesting to see how this works in practice and whether Standard will start to worry about advisers migrating elsewhere. The details of the referrals and which advisers really benefit will be interesting too. They could use postcodes but, then again, I know of south-coast IFAs who have clients in Glasgow.
But it certainly helps Standard’s pitch.
If you have assets with Axa Elevate, for example, will their intermediated users be asking whether their business partner is going to implement a similar system? Should Royal London be feeding business to advisers on Ascentric? It also makes a very interesting challenge to Cofunds and Legal & General and perhaps FundsNetwork with its direct book.
The Standard message is also accompanied with some hard-hitting warnings about other rivals suggesting you need to use stable stars not unstable ones as in red giants – platforms with lots of assets but which are unstable pre-RDR assets – white dwarfs that collapse in on themselves and supernovas which explode and leave their clients orphaned.
In the presentation, Standard MD Richard Charnock mused about a future late-night Friday call asking if they wanted to take over a rival, and there was mention of Lloyds shotgun marriage to Hbos in that context.
It sounds like the stuff of investment advisers’ nightmares. No doubt, Standard’s sales team is taking the same message to advisers across the UK. The heat just got turned up another notch on rivalries in the wrap and platform world.
John Lappin blogs on industry issues at www.themoneydebate.co.uk
