InvestmentsJul 20 2015

‘I call it the perfect storm that’s happening right now’

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Standard Life’s Graham Dow admits that not gaining a university degree may have been the “chip” on his shoulder that has spurred him on throughout a career that has seen him in sales and marketing roles, through to managing fund group relationships and now as head of wealth manager propositions.

Mr Dow has come full circle, having started out at Standard Life only to return years later. He recalls that the company “came knocking” for him while he was at Scottish Life.

He says: “I was [there] at the start when Scottish Life launched its managed strategy proposition, doing stochastic modelling but engaging with external fund managers and groups. And then Standard Life came knocking and said: ‘We see what you’re doing over there, we’re about to launch this thing called a wrap, would you fancy coming back and doing the role at Standard Life?’

“It just felt like coming home – it was a bit of a no-brainer returning to Standard Life.”

Mr Dow rejoined as head of investment group relations in 2006 and clearly has never looked back. It was a formative time for the industry and he was at the centre of it, having been tasked with leading all the relationships with external fund management groups.

He explains: “The one thing I was very conscious of at the time was that a lot of platforms and life companies were moving into open architecture. The role I held was quite a – I suppose you could use the word – ‘powerful’ role, because every fund group in the land wanted to work with [our] business or work with our platform.

“Historically, advisers would go individually to the fund group to buy products. But with the launch of platforms, invariably the platform would sit in the middle and we were effectively the conduit or the facilitator between the two. So the fund groups felt it was important to get close to us.”

He continues: “An observation of some of my peers was that they perhaps got a little bit power crazy. I think it’s fair to say that some of the platforms were nailing the fund groups to the floor in terms of demands – not necessarily in price but in the way they worked together. I always thought that was completely the wrong way to do it.

“I think that, to some extent, the chickens have come home to roost for the people who acted in that way. The view I always took in terms of the relationship was that it was my duty to make the people I was working with – or [who] wanted to work with us – really believe the Standard Life story.”

Mr Dow says that his approach to building industry relationships paid off when it came to conversations about the availability of ‘super clean’ share classes in 2012 and 2013.

“In the fund groups’ minds, Standard Life was predominantly a good company to work for or with,” he argues.

“We were always fair; we have always been open about our intentions and about our strategy. There was a broader understanding and will to try to do what we were asking [the fund groups] to do.”

Now as head of wealth manager propositions, Mr Dow again finds himself in a part of the industry that is undergoing significant change at the hands of regulators, with the sunset clause due to come into effect.

He explains: “What we’re seeing now is that more and more advisers are having to outsource. So I call it the perfect storm that’s happening right now.

“Normally when there’s regulatory change in our industry, they are regulations about how we should do things differently. We’re being told not to do it this way, but to do it that way because there’s a customer benefit from it.

“The RDR was very much that – don’t take commission any more as we want you to be more transparent and a fee has to be charged. Similarly, we’re not allowed to take rebates any more in fund group relationships as it has to be clean. So there shouldn’t be any financial interaction between us and the fund group.”

Returning to the sunset clause, he points out: “The adviser is now having to say to the client: ‘You now have to write me a cheque for the services that I’m giving you’. And the client will think in some cases, ‘what service?’”

In addition to that are the much-heralded pension reforms, which mean those at retirement age are no longer obliged to purchase an annuity. Instead, retirees have access to their pension pot and responsibility for ensuring it lasts them throughout their retirement.

Mr Dow notes: “That’s probably quite unique because it’s the first piece of regulation in my memory that has awoken the man on the street to financial services, and they have been picking up the phone and coming to us.”

It also means that advisers are increasingly outsourcing to discretionary fund managers (DFMs) as their clients require ever more bespoke services. “The DFM’s business model is under threat and I suppose the big challenge that I’m facing is in helping them to understand this and to give them solutions that remove a lot of the operational business risk,” he says.

“My role now [has expanded so] that while Standard Life has a wrap platform, which is the adviser-facing platform, bolted on to that is an investment hub that is really an investment platform for the DFMs.”

Mr Dow thinks Standard Life is a “progressive” business – the type of company he has always wanted to work for. “I suppose that goes back to me as an individual – never happy just to sit… I want to keep progressing,” he says.

The industry he has ended up in has certainly allowed him to do just that. What sparked his interest was economics. “I’ve always been interested in economics and business, because to me it’s real life and it’s living,” he reveals.

“That’s what I loved about economics at school – you would go home at night and it would be on the TV in front of you.”

He recalls that in Edinburgh in 1987, where he grew up, those looking for a “stable job” either went to a bank or a life company. “I think I was naturally more drawn to a life company environment than a bank,” he admits.

“I had just got a job at Standard Life and my first task was reinstating lapsed endowment policies and administration, which was fascinating.

“I suppose when you’re an 18-year-old boy and you’re starting out, you’re shaped by your environment. So at that point in time I very much became a Standard ‘lifer’.”

Nevertheless, after 10 years at the firm Mr Dow left to take on various roles at other life companies. One of his earliest jobs was at Clerical Medical as an account manager and he insists it was one of the best moves he ever made.

He says: “I was going out to the borders in Scotland and seeing very small adviser firms, and I really understood what made them tick, what their motivations were.

“So that was really interesting. A lot of them did business with you just because you went to see them as they largely felt ignored. What it brought home to me was that ultimately a lot of products that are produced are commoditised, and what people are really looking for is service. So if you’re giving them a good enough service and support, they will support you.”

At a time when the traditional adviser role is under threat, that experience certainly informs his current job at Standard Life.

Mr Dow laughs: “I jokingly say that if you look back at the companies I worked with, none of them exist any more. It was almost as if I was on a mission from Standard Life to take down the competition.”

CV

Graham Dow

2015 – present

Head of wealth manager propositions, Standard Life

2006 – 2015

Head of investment group relations, Standard Life

2002 – 2006

Business development manager/head of investment marketing, Scottish Life

1999 – 2002

National account manager, Scottish Amicable/Prudential

1997 – 1999

Account manager, Clerical Medical

1987 – 1997

Sales and marketing roles, Standard Life