A three-month delay on the Carey Pensions rebrand has resulted in fewer clients opting for the group's new Sipp product than expected, according to the chief executive officer of STM Group.
According to STM's final results for the 12 months ended December 31, 2019, published today (April 28), the re-launch of the Carey Sipp did not generate the level of new business volumes originally expected, which the firm said was due to delays rather than issues with the product itself.
Carey Pensions was acquired by STM Group in October 2018 and now goes by the name Options Pensions.
Alan Kentish, chief executive officer of STM Group, told FTAdviser the rebrand had been pushed back from Q3 2019 to February this year, which had delayed the marketing of the rebranded Sipp to advisers.
This then led to a lack of engagement with the pension product.
Mr Kentish said: “Now the rebrand has been completed we can move onto the next phase and start engaging with advisers to grow the Sipp side of the business.
“We are not looking to compete with the large platform Sipp businesses, such as AJ Bell, but would like to see 500 to 600 new Sipp customers join us by the end of 2020.”
According to the results, the group’s Sipp products brought in £2.7m in revenue in 2019, up 40.7 per cent from £1.6m in 2018, driven by the Carey acquisition.
Total revenue across its pensions businesses amounted to £14.1m (2018: £11.5m) and accounted for 61 per cent of total group revenue (2018: 54 per cent).
Recognised overseas pension schemes continue to be STM’s largest revenue generator accounting for £10.1m of revenue, with administration being carried out in Malta and Gibraltar.
The Covid-19 effect
Despite the coronavirus crisis having a detrimental effect on many UK businesses, STM Group says it is largely protected from downturns as it operates on a model based on fixed annual fees.
The financial services group has estimated that about £400,000 of its existing £18m of 2020 recurring revenue is at risk, with a similar consequential risk to profitability.
But has admitted that it is difficult to assess the impact of Covid-19 on new business income for 2020.
Mr Kentish said: “It is already apparent that both intermediaries and providers, including ourselves, are embracing technology to utilise new ways of conducting business.
“The reality is that decisions in relation to financial planning still need to be made, arguably even more so now, and therefore new business volumes might be delayed by a number of months but will over time revert back to normal.
“There is therefore a risk that new business run-rates will be set back by some months, although this is not a trend that we have observed to date.”
He added: “From an operational point of view, we have successfully implemented continuity plans across our businesses within the various jurisdictions.
"We have instigated contingency procedures within our businesses so as to both protect our staff as well as ensure that we are able to maintain service levels to our clients.
“Almost in their entirety, my STM colleagues have now adopted a working from home routine, and it is commendable that we have not seen any changes to our service levels to our customers, and other stakeholders.”
Looking ahead
The group still expects to see additional costs within the Sipp market, such as rising professional indemnity insurance, due to ongoing uncertainty in the market caused by various Sipp cases, including the Carey vs Adams case of March 2018, which still does not have a determination published.
The group’s focus in the first half of 2020 will be on “showcasing our UK orientated products across our rebranded Sipp and workplace pensions offerings, as well as our unique flexible annuity wealth preservation solution”.
The second half of 2020 will see the launch of an international occupational pension out of its Malta and Gibraltar businesses.
amy.austin@ft.com
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