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Standard Life Aberdeen reveals direct to consumer ambitions

Standard Life Aberdeen reveals direct to consumer ambitions

Standard Life Aberdeen has set out its plans to push much further into the direct-to-consumer market after it sells off its insurance arm.

The provider has agreed to sell its insurance arm to Phoenix Group in a £3.2bn deal but will keep hold of its three adviser platforms - Wrap, Elevate and Parmenion - and 1825, its restricted financial advice business.

In a circular published today to its shareholders, Standard Life Aberdeen has set out how it plans to position itself after the deal goes ahead.

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Because of the growing importance of Standard Life Aberdeen's retail channel, the company said it will continue to invest in this, including developing more comprehensive direct-to-customer service for the non-advised market in partnership with leading retail brands.

It cited its recently announced joint venture with Virgin Money - which will see Aberdeen provide asset management services to the bank's customers - as an example of this.

As part of the deal, which comes with £158bn of assets, Phoenix Group will pay £2.28bn in cash and Standard Life Aberdeen will take a 19.99 per cent stake in Phoenix.

The two companies will also "significantly expand" their strategic partnership, with Standard Life Aberdeen becoming Phoenix's "preferred, long-term asset management partner".

Standard Life Aberdeen said this strategic partnership would give it access to Phoenix's 10m customers, which it could offer "relevant propositions and services", including advice.

In the circular Standard Life Aberdeen's chairman Sir Gerry Grimstone said: "The retail platforms and 1825, together with the proposed alliances with the Phoenix Group and Virgin Money, offer Standard Life Aberdeen proximity to retail customers at a time when individuals are becoming increasingly responsible for their own saving needs and the need for financial advice continues to grow.

"These highly attractive structural growth trends, combined with the retail platforms’ market-leading propositions, have led to strong asset flows into Standard Life Aberdeen’s retail platforms and 1825, with organic net inflows of between 18 per cent and 26 per cent of opening assets under administration in each of the last five years to the year ended 31 December 2017."=

This asset growth has increased revenue from £58m to £182m over the same period, Standard Life Aberdeen said.

In relation to 1825, this currently has 78 restricted - not able to independently advise on all products across all providers -  "investment professionals" operating out of 11 cities across the UK but Standard Life Aberdeen said it is continuing to grow the advice business.

Sir Gerry added: "In addition to enhancing the investment management relationships that Aberdeen Standard Investments has with UK wholesale customers such as private banks and third party investment platforms, our strategy is to focus on retail propositions making use of Standard Life Aberdeen’s electronic platforms, financial advice and investment solutions to serve independent financial advisers as well as advised and non-advised customers.

"While the retail platforms have grown strongly, we believe that their profitability can be improved in the medium term due to the scalability of the operations and the scope for further efficiency optimisation.