CompaniesSep 3 2015

A wanderer returns

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A wanderer returns

“We are committed to supporting advisers” is the catchline behind the initiative, designed to equip advisers with the tools to provide a top quality service amid a surge in demand for financial advice, which is attributable to the new pension freedoms.

David Tiller, head of adviser propositions and strategy at Standard Life, said: “If we fail to address the advice capacity gap, many people who need and want advice will not be able to access it. We have a collective responsibility to try our best not to let down these people through a failure to modernise our thinking.

“RDR and pensions freedoms have created a new market environment. This means a new way of working while investing in the things that can help advisers reshape their businesses to be able to meet the demand.”

Notable features of the programme include the systemisation of advice processes deemed complex by the firm, such as asset migration, back office integration, tax optimisation of client income withdrawals, capital gains tax modelling and strategy execution.

It also includes adviser-led investment insourcing, which the firm said gives planners access to investment specialists without the loss of control experienced with traditional investment outsourcing, and a ‘back book’ client safety net – providing an ongoing non-advised service to clients where full advice is not economically viable.

Standard Life said it will also support advisers by providing insights into UK and global best practice with technical support, regular adviser events and webinars.

Mike Hogg, head of platform strategy at Standard Life, said the company is due to bring out a tax optimisation tool designed to help advisers draw assets out of wrappers tax-efficiently.

Claire Burston, a spokesman for the firm, said the tool covers multiple products, not just pensions, and is earmarked to be released this month. It will be made available through its wrap platform and through the Adviserzone website. The key feature of the programme will also be made available through the two mediums.

Martin Bamford, managing director of Surrey-based Informed Choice, said: “There is no such thing as a free lunch. The intermediary market is important to providers, so Standard Life is most likely trying to attract new business. Essentially, it is a marketing ploy aimed at building a closer relationship with advisers.”

He added: “I have no doubt this support will be valued by advisers, but in a post-RDR world, advisers will have to question the relationship they are entering into.”

The group is no stranger to the adviser market. The industry gasped in astonishment as the life office announced its return to the adviser market in February this year with the purchase of Skipton Building Society’s advisory arm Pearson Jones.

Standard Life launched its restricted financial advisory business called 1825 – in reference to the year Standard Life was founded – following the acquisition.

The merger was expected to bring 39 advisers and paraplanners in a team of 102 employees. However, the group announced its intention to make mergers to add muscle to its advice arm that would use the Standard Life wrap and investment products.

Standard Life had previously owned a 20 per cent stake in advice firm RSM Bentley Jennison before disinvesting in 2010. In the same year, Standard Life sold its 15 per cent holding in 2Plan to Openwork.

It fully withdrew from the market in 2013 through the sale of its 10 per cent stake in SimplyBiz.

The rhetoric at the time was that life offices sought a move away from advice because there was no money to be made from it – partly due to the stringent regulation introduced as part of the RDR, according to Daren O’Brien, London-based adviser at Aurora Financial Solutions.

He said: “Standard Life might have been worried about the change in the adviser charges from commission to a fee-based model following the RDR. I also do not think it was making a lot of profit from its stake in SimplyBiz.”

During its hiatus in the financial planning market, the group had directed its attention to bolstering its platform, Mr O’Brien added.

Standard Life outlined the direct-to-consumer market as an area for business growth following the implementation of RDR, in its report published in 2013 entitled Capitalising on Growth Opportunities in the UK Market.

In the previous year, the group struck a five-year deal with RBS, which allowed the Standard Life wrap to deliver investment solutions – including Isas, Sipps, onshore and offshore bonds – through RBS, NatWest and Ulster Bank advisers. It launched its non-advisory service the following year.

The announcement of pension freedoms in the 2014 Budget had somewhat skewed Standard Life’s vision for the future, according to Clive Waller, managing director at CWC Research.

The reforms were a major contributing factor to the group’s return to the adviser market and its endeavour to better engage with financial planners through Generation Advice, he added.

“They changed the universe as we know it. From the announcement, it was clear that there would be a huge influx in the demand for financial advice and guidance. The issue with this is the cost of advice. I can imagine Standard thinking that it could make advice accessible through restricted advice.”

However, the move could also signify the group’s attempt to safeguard its wrap, which has more than £20.9bn assets under management, from IFA consolidators firm – many of whom have their own preferred platform provider.

Mr O’Brien said: “Consolidators will continue to acquire large adviser firms. The concern comes if Standard Life does not find itself on the provider panel of these large adviser firms.

“They can gain some of the market share by simply securing distribution.”

Ray Tammam, IFA and mortgage broker at Manchester-based Fairstone Financial Management, disagreed.

He said: “I do not think consolidators pose a major threat to Standard Life. Advisers will use their service if it continues to be competitively priced and offer a good service. Standard Life is a well-known and trusted brand among advisers and clients.”

He added: “If an adviser identifies as being independent they should not have a preferred platform.”

Standard’s Life renewed focus on the financial planning market could be a response to moves made by its competitors, Mr Waller said.

In the week Standard Life announced its acquisition of Pearson Jones, Intrinsic unveiled its practice buyout initiative that allows owners of financial planning firms to sell their business while ensuring their client receives advice from an adviser within the network.

The network was purchased by rival firm Old Mutual in 2014, bringing 3,000 financial advisers under its remit – significantly more than the number of financial advisers gained by Standard Life through the merger of Pearson Jones.

For Mr O’Brien, Standard Life’s return to the adviser market and the launch of the Generation Advice initiative is part of an industry-wide philosophy of identifying and securing new distribution channel.

He said: “Auto-enrolment and pension freedoms have opened up a host of opportunities for advisers. Life offices would want to ensure they have their fingers in many pies to boost their revenue streams.”

Myron Jobson is a features writer of Financial Adviser

Key Points

■ Standard Life has launched its Generation Advice programme for supporting financial advisers.

■ Notable features of the programme include the systemisation of advice processes such as asset migration.

■ Standard Life’s return to the adviser market is part of an industry-wide business model of securing new distribution channels.