When Standard Life announced in February it was returning to the advice business, the entire industry reacted with astonishment.
Surely the narrative was that life offices were pulling out of advice, and there was no money to be made.
But the new business, headed by managing director of advice and strategy Steven Murray, has been set up because the company sees an opportunity.
Mr Murray said: “If you look at the various changes we’ve seen in the market over the last few years – the freedom and choice in pensions – we think the demand for advice is likely to exceed supply.
“People’s financial needs are inherently complex, and they are looking for someone who is qualified and experienced.”
In the first step of fulfilling this strategy, Standard Life announced earlier this year that it was buying Pearson Jones and its 39-strong adviser team. The company already has 20 advisers in its private client wealth business, and the plan is to grow the advice division by taking on new people.
As the advisers will ultimately be employees of Standard Life, they will be subject to the company’s own system of compliance in the hope of avoiding the consequences faced by Friends Life and Sesame.
Mr Murray said: “Over time we will look to standardise the way that processes operate. The firms that we partner with very often have good strong processes in place already, and clients are getting suitable advice. All good firms will evolve their processes over time, and we will be no different in that regard.”
It will be a restricted business, although these restrictions will be “limited” and advisers will advise on legacy assets.
But the big question behind it all is: why? Many have suggested that the life offices are going through a profound change in the wake of the pension reforms and this move by Standard Life is a clear pitch to secure distribution.
Mr Murray said: “We do everything that is in the best interests of the customers and they will not be doing anything that is not suitable for those customers. Providers and banks had direct sales forces – that is not what the the remit of this business is. We are providing high-quality financial planning and advice.”
But is this diversification into a new line of business a desperate move in anticipation of a loss of sales through the abolition of forced annuitisation?
Mr Murray said: “We have been aware of these changes for a while and we are very supportive of them. Standard Life is the number-one drawdown provider in the market, and we are well positioned.
“The annuity business is a very small part of the group’s overall business. The intention here is not to deal with the changes elsewhere – it is a very positive strategic step to deal with the capacity crunch.”