Standard Life has achieved the biggest flows onto any platform this year, its UK and European chief executive said, following on from its results published this morning.
Speaking to FTAdviser, following the group’s first half results this morning, Paul Matthews said the platform is banking on increased fee revenue from its wrap platform, drawdown funds and auto-enrolment business, rather than the capital-heavy annuity side where sales are falling, says their
He said that Standard Life has never been a huge annuity player with historically around three out of every 10 customers opting for this product.
Even at that conversion rate, Mr Matthews said they have a “significant amount” in the back book.
The interim report stated that the full year contribution from annuity new business is expected to reduce by between £10m to £15m, on the back of a 66 per cent reduction in annuity sales during the first half.
This contributed to UK profits falling 15 per cent during the first six months, although other areas of the business pushed assets under administration up to £130.4bn, driven by workplace and retail new fee business net inflows up 23 per cent to £2.9bn.
Mr Matthews explained that one of the reasons to focus on the retail and corporate space was that unlike annuities, from a solvency point of view, they put the firm in a “capital light” position.
Assets in the drawdown proposition rose 12 per cent from the full year 2014 to almost £13bn, while the wrap platform continued to attract advisers, with assets under administration up 11 per cent to £23.3bn from £20.9bn over the full year 2014.
“With the sunset clause coming in next April, more advisers will seek to move onto our platform, as we’re already priced for the change that differentiates us.
“There are already many advisers moving across from the fund supermarkets, in fact we’ve had the biggest flows onto any platform this year.”
Fundscape data confirmed the wrap has the highest net sales in the advised platform market during the first quarter.
He also re-stated that the focus was moving away from annuity income towards fee-based revenue, arguing that “annuities aren’t the best option for anyone with a decent pot” and adding that “drawdown presents a great opportunity going forward”.
The firm’s ‘Active Retirement’ ready-made drawdown option was launched in June, which Mr Matthews said was their fastest growing fund ever.
Meanwhile, with auto-enrolment moving to the small and micro business phase, Standard Life expects to continue getting flows into its solutions, which saw 120,000 new pension scheme members coming on board during the first half of the year.
peter.walker@ft.com
