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.”
Other people might be affected negatively by these changes, he added, “but we are not in that position”.
The challenge is, can they make money from it? “In this market we have to do it at the right price point. We have to make an acceptable return; we are able to provide a high-quality service for customers that helps fill that capacity gap that is commercially appropriate,” he said.
Mr Murray’s new role has been created out of the work he did previously as group strategy and corporate finance director. Though not solely responsible for the development of this latest venture, he said, he was nonetheless working on the impact of pension freedoms regulations.
Of the new job he said: “It was a very natural segue. I was appointed by Paul Matthews, the UK and Europe chief executive, to work up this role.” As head of strategy he was in charge of the disposal of the company’s Canadian operations.
“It is different to the role I was doing before but that is what is exciting about it for me. There is a huge opportunity to do something in the customers’ interests, utilising different components that we already have as a group. These opportunities are quite rare to get hold of.
“It is getting involved in something at the launch phase, and the ability to shape the business.
“You could argue that there is more risk. We are launching a new business. If you look at the statistics then new businesses can fail from time to time. That is not our plan. Our plan is to make this a success.”
Needless to say, the company is clearly in the middle of a turning point in the pensions industry, and no one can predict which way it will go. Mr Murray said: “We have already seen Aviva and Friends come together for a bunch of reasons. It may be for some that combining with their peers is the right way to go.
“I think a number of companies have been successful at innovating and changing their business models and I think a number of providers are well placed. There is always a risk there will be winners and losers.”
Melanie Tringham is features editor at Financial Adviser
Steven Murray’s CV
2015-present Standard Life - managing director of advice and strategy
2011-2014 Standard life group strategy and corporate finance director responsible for the group’s organic and inorganic strategy
2004-2011 Joined Standard Life, working in internal audit and on the company’s listing programme before moving to corporate finance
Prior to Standard Life, Steven worked for Ernst & Young across a variety of disciplines
