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Skandia platform to cut costs after £5 million loss

by Jun Merrett on Nov 21, 2012 at 11:55

Skandia platform to cut costs after £5 million loss

Old Mutual Wealth is set to cut costs on the Skandia platform by half after it made a £5 million pound loss in the first half of 2012.

In an presentation to investors Mark Satchel, Old Mutual Wealth's chief financial officer, predicted that platform revenues as a proportion of the funds under management would fall from 52 basis points (bps) to around 40-45 bps in the future.

The presentation showed that revenues of 52bps of the platform’s £20.4 billion in funds under management were offset by expenses of 57 bps.

This resulted in a loss of £5 million, or 5 bps of £20.4 billion.

Skandia said it was targeting a cut in platform expenses by around half from 57 bps to 25-30 bps.

The £5 million loss for the first half of 2012 follows the £11 million loss the platform made in 2011 which it said was due in part to its investments for the retail distribution review.

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6 comments so far. Why not have your say?

Bob Donaldson

Nov 21, 2012 at 14:34

Due diligence takes on a whole new meaning when a company such as Skandia loses £5m in the first half of the year only.

Slippery slope springs to mind!! Last one out the office switch off the lights!

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Sammie

Nov 21, 2012 at 14:56

Jobs cut at Skandia, job cuts announced at Standard life profits down costs up .

What an unmitageted shambles the industry is. Well done to all those unqualified box tickers who regulate us at the FSA go and award yourselves a pat on the back , oh and dont forget to pick up you bonuses for a job well done.

I have said it before and since I have managed to coax my 62 year old brain to achieve level 4 I will be around next year so say it again, you could make this shit up.

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effessay

Nov 21, 2012 at 15:13

The irony is that the more funds under management they have, the more they lose. I bet Skandia are hoping for a market correction.

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rumnian

Nov 21, 2012 at 16:39

Same to come for the other 30 odd platforms / wraps?

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Xiang Xhi

Nov 22, 2012 at 12:05

For a start they could try being helpful with advisers over the telephone. Directing me to your website, which is about as easy no navigate as a formula 1 car with no wheels, does not get the job done quickly for me.

If you are going to refer everyone to your website and refuse to give out valuations, you might want to start making it easy to understand and navigate. I'm no rocket scientist, but my guess is this will improve relations with borderline users of the Skandia platform and, heaven forbid, encourage them to place more money with you.

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ANDY WOOLLON

Nov 27, 2012 at 15:23

This is the point I was making on the AXA Elevate cutting platform charges article yesterday. If you want platform charges cut to the bone, then these are achieved by removing human support (i.e. making staff redundant), in favour of the platform-user doing the work and obtaining what it is they need from the platform themselves. You cannot have an ultra-cheap platform and the same level of human support, as has previously been provided. (And no I don't work for Skandia). Plenty of other examples in the retail sector e.g. Comet cannot compete against online prices, if they have stores/stock/people!

It has to be about balance, a balance between platform cost and value-for-money, remembering that if you don't get this support and/or have to buy this support in, it will potentially increase your costs and those passed to the customer via your adviser charges.

One things for sure, financial strength/longevity and service attributes, will be key parts of platform due diligence.

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