An IFA has made a formal complaint to Standard Life after being told that he needs to commit to placing between £3m and £5m of assets under management on its platform in the first 12 months, saying this will preclude him from using the service for a segment of clients post-2012.
Andrew Gillott, owner of LFP Financial Planning & Wealth Management Ltd, told FTAdviser that after conducting his due diligence on Standard Life he decided that the platform was “a good match for my client bank”.
After failing to register online, he called the provider and was told that not only will Standard Life have to conduct due diligence on the firm, but also he will need to give a ‘firm commitment’ to place £3m-£5m of assets under management in the first 12 months.
Mr Gillott said this level was too high for him to use the platform for only a portion of his client base. He said he uses a range of platform providers to service different client segments, in line with regulatory guidelines that most advisers will need to provide a suite of options post-Retail Distribution Review.
When Mr Gillott asked what would be the consequences if he didn’t meet this ‘commitment’, he was told that Standard Life could choose to de-register the firm from the wrap.
A spokesperson for Standard Life said that the due diligence it performed did not amount to an “invitation process”. The spokesperson added that a “significant commitment” was required on both sides to “build a solution that meets client needs” and that as part of advisers “embedding” the service into their business they discuss the amount of assets that will be placed.
Mr Gillott said: “They stopped short of using the word ‘guarantee’ but said I would have to give a ‘firm commitment’ to place £3m-£5m in the first 12 months.
“Committing to put a certain amount of business their way is wrong as only a portion of my business may be suitable for the platform and putting people on there when they shouldn’t be, to meet this quota, would be giving unsuitable advice [under RDR rules].
“Surely in an RDR and TCF world it should be the adviser deciding where to place a clients’ investments. It seems that Standard Life only wants to play if you have large assets under management to place with them and are not interested in small IFA firms.”
Mr Gillott said he normally uses Skandia Investment Solutions, which he said does not ask for a minimum amount of adviser business.
FTAdviser also spoke to FundsNetwork, Ascentric and Cofunds, all of whom confirmed that IFAs do not have to place a minimum amount of business in the first year.
The Standard Life spokesperson said: “There is a significant commitment involved on both sides to build a solution that meets client needs and is embedded in the adviser business. A key part of the process is to help advisers segment their customers so we can be confident any solutions we offer can meet customer needs, hence the need for robust due diligence on both sides.