National adviser network Origen Financial Services is to “transform” from being a ‘whole of market’ network to a “tied agent” of parent company Aegon following the introduction of the Retail Distribution Review, as it seeks to find a way back to profitability.
In November 2012, FTAdviser sister publication Financial Adviser reported that Origen has launched a restricted advice pension and benefits solution for small businesses linked to its parent company Aegon.
The service provides access to the Aegon Retirement Choices platform. At the time the firm said this arm would operate “alongside its whole of market propositions”.
In Aegon’s results covering the three months to June 2013, published today (8 August), it said Origen is to be “transformed” and will only selling Aegon products. Origen has for several years made losses, most recently posting a £2.9m loss for 2012.
The results also revealed that the sale of Aegon’s other national IFA Positive Solutions to Intrinsic earlier this year cost it an £18m “book loss”.
FTAdviser sister title Financial Adviser reported yesterday (8 August) that Origen has grown advisers this year, hiring nearly a sixth of the former Clydesdale and Yorkshire bank advisers who were made redundant earlier this year.
Mike Kirsch, the chief executive of the Aegon UK-owned advisory firm, said: “It was a bit of a coup in June when we picked up 18 of the advisers who had to leave the Yorkshire and Clydesdale banks when owner National Australia Bank closed its advisory arms.”
Aegon made an overall £3m loss, driven by charges of £27m related to further restructuring as part of Aegon UK’s transformation into a “platform-driven business”, reversing a £23m profit before tax made in the quarter.
Business transformation costs in the second quarter of 2013 were mostly related to the closing of multiple traditional sales offices.
The restructuring is expected to continue into 2014, including upgrading existing customers to the platform. This is expected to increase revenues through consolidating customer assets and to further result in cost efficiencies, the firm said.
New life sales at Aegon were up 45 per cent to £247m, driven by auto-enrolment and strong platform, and group pensions sales.
Earnings from pensions declined to nil, Aegon said. The negative effect from “adverse persistency”, which it said the UK insurance industry is experiencing as a result of the implementation of the RDR, amounted to £8m in the second quarter.
Earnings in the second quarter were also negatively impacted by lower fee income, according to the results. The fee margin is declining as the older business matures and clients are upgraded to the platform.
Aegon said this new business generates lower fee margins as commission is no longer paid and recovered through fee revenues, which will be offset by the consolidation of assets from other sources and lower expenses as the platform is more cost efficient.
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