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Skandia signs up just 8% of platform clients to adviser charging

by Jun Merrett on Dec 12, 2012 at 08:14

Skandia signs up just 8% of platform clients to adviser charging

Skandia has signed up just 8% of its platform clients for its adviser charging facility, which will launch on 18 December. 

The Old Mutual-owned provider said 30,000 clients had signed up, after applications for the facility were opened in May.

A Skandia spokesman said: '[Opting for Skandia's adviser charging] is up to the IFAs. We think it's really encouraging that 30,000 have signed up when we haven't launched adviser charging yet; these are just pre-registered clients.'

Skandia announced in May that for its adviser charging model it would allow advisers to select monetary or percentage options for initial, ongoing, switching and ad hoc fees. It said it would set maximum fees of 4.5% for initial, 3% for switching and 1.5% ongoing.

Last month Old Mutual Wealth set out its intention to cut costs on the Skandia platform by half after it made a £5 million loss in the first half of 2012.

In an investor presentation the company said it was targeting a cut in platform expenses by around half from 57 basis points to 25-30.

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32 comments so far. Why not have your say?

Robert Johnsey

Dec 12, 2012 at 08:42

I have 15 to send in later this week:)

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Julian D

Dec 12, 2012 at 09:03

Completed all of ours (220+) last month. I can't believe IFAs have been so lax for something this important...or can I? Perhaps this is a sign of advisers being scared of discussing fees with their clients?

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You must be joking

Dec 12, 2012 at 09:17

For the 8% of clients it certainly is encouraging as their IFAs will have been proactive in discussing the post RDR world, gone through the options for paying fees, the ability to turn ongoing fees off and (hopefully) are receiving an ongoing service that they value.

Skandia have also met their own regulatory requirements to verify the clients agreement to these ongoing fees (there appears to be a lot of supposedly RDR ready platforms out there that haven't done this!).

For the other 92% this is perhaps not such an encouraging picture, are their IFAs trying to 'hang on' to ongoing trail by not providing ongoing reviews or are their IFAs too disorganised to have got this sorted out? Or, as Julian says above, are their IFAs not happy about actually discussing fees?

I wonder how many IFAs will get through teh first half of next year without whinging about 'trail being turned off'?

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CD

Dec 12, 2012 at 09:24

Having looked at the offerings of the platforms for unbundled charging, it seems to me that the client will pay more in charges than under the old bundled system. It therefore seems to me that in order to treat my clients fairly I should keep them on the lower cost arrangment until something occurs, such as a fund switch or further investment when they will have to move. Until then my clients are part of the 92%.

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Jon Foley

Dec 12, 2012 at 09:30

IFA's are likley waiting until the client's next review and will sign them up to adviser charging if they need to trigger an event that will stop the fund based renewal being paid.

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You must be joking

Dec 12, 2012 at 09:36

CD

Completing the Skandia Advance Adviser Charge form did NOT move clients from the current bundled to the new unbundled charging structure, thus there needn't have been ANY change to either the ongoing advice charge or total ongoing charge.

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Mr B-Mused

Dec 12, 2012 at 09:49

Or B, many advisers have legacy arrangements with Skandia but have no intention to keep on using them....

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Kev S

Dec 12, 2012 at 09:55

As I understood it the advance form doesn't activate the adviser charging authority until 31st December not the 18th when the the new system goes live.

Our forms won't be sent in until the end of this week (Over 200).

There are two things at play here, the first is bad planning on the part of many IFA's who understand adviser charging but haven't or won't do anything about it.

The second is more worrying and one that I witnessed first hand at a conference a week or so ago, and that is the utter lack of understanding by many IFA's about what adviser charging actually means to them and their businesses. I kid you not with less than 2 months to go there were IFA's asking if doing a bed and ISA in January would turn off their trail commission.........

I suspect theres going to be an awful lot of irate advisers on the phone to life offices in Q1 2013 claiming that they couldn't possibly have known that the transaction would turn off the trail commission.

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Julian D

Dec 12, 2012 at 10:38

@ CD

If you've chosen the SIS platform to enable you to proactively manage your clients investments then can I suggest that you spend the next week or so getitng all of your clients to sign the Agreement as unless you do, the next fund switches you make (albeit individual or bulk) will stop your ongoing income.

If you haven't selected SIS for this reason then perhaps the clients should be moved somewhere else cheaper?

Also clients will retain the choice of bundled or unbundled, the SIS comparison tool on their website will help you and them decide. Which is cheaper depends on the amounts held on the platform.

@ Kev S

I couldn't agree with you more. It would seem that many advisers have chosen the camel's head in the sand approach. That's going to painful soon!

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Michael Brown

Dec 12, 2012 at 10:40

Kev

If you have not sent in the old forms by yesterday then you will have to get the new forms signed. I fear you may have wasted a considerable amount of time as they will not recognise the old forms now.

With regards to changing from 1 - 2 as Julian and others have said there is no effect on the client’s current arrangements.

As for option 3, we will only know from when SIS releases the package that allows us to see if they should go to 3 or not. Therefore to make an assumption it is not in the clients interest is like looking into a black hole at present.

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PHILIP EDWARD

Dec 12, 2012 at 10:59

Why would any adviser continue to use a Platform that loses as much money as SIS. Surely if the adviser has carried out due diligence on the platform they would be moving their clients to a profitable, sustainable platform.

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Julian D

Dec 12, 2012 at 11:07

@ Philip

You're starting a whole other discussion there Philip.

If you're debating that then you need to consider the reason for 'losses' and understaand how much of those have been caused by reinvestment, such as significant platform amendments to make yourself one of the sustainable players post RDR.

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Robert Johnsey

Dec 12, 2012 at 11:08

Michael - it does not say anything on the form about a deadline - I know that Skandia started processing on onday but that is not the same.

My reading is that the forms needed to be with them in December.

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CD

Dec 12, 2012 at 11:08

I stand corrected and to all those who have commented thanks. Sadly I lost my Skandia consultant as he was made redundant, so have tried to work out what to do with reference to their website. Cofunds does seem so much more straightforward, but then they have been out on the road so I have had their system explained to me.

But I still don't understand what this has to do with adviser charging. My clients wil continue to pay me 0.5% the only difference is that instead of coming from the provider, they will actually pay it themselves from their cash account.

And in the expectation of being shot down, why does it make any difference when the form is sent in?

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You must be joking

Dec 12, 2012 at 11:15

@ Robert & CD

You are both correct in that the adviser charging does not take effect until 1st January, HOWEVER, the 10th December was the cut off date to guarantee that the form would be processed in time for 1st January (there a few holidays coming up you know!)

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Michael Brown

Dec 12, 2012 at 11:17

Robert,

Unfortunately we were informed that these forms had to be with them by the 18 or are useless.

If you go onto the website you will be able to find the new forms.

I do hope that you can create a fuss and get the old forms accepted.

Regards

CD

Yes, If they do not get the forms when you nexty rebalance etc you will lose your trail

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Julian D

Dec 12, 2012 at 11:22

@ CD

I think you should watch the webnar broadcast last week (on Friday) as that explains a lot that is being discussed here.

In a nutshell, SIS do not operate a cash account, if you're used to fund based COMMISSION then this will stop after your next switch post 18/12/12. Also FB is variable as it varies from fund to fund. By changing to adviser charging you will get a fixed payment based upon what you've agreed with your clients, if that's 0.5% then you don't need to worry what funds you pick, you will always get paid 0.5%. SIS deducts the charge as an explicit amount and any fund based commission due is refunded to the clients investment in the form of units.

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CD

Dec 12, 2012 at 11:37

Thanks Julian I will go and watch the webinar. Thank goodness most of my clients are on Cofunds!

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Knightrider

Dec 12, 2012 at 11:40

The form will switch on Adviser charging , but the plan still remain in the existing charging structure £68.50 fee

If Top ups are made then the plan will have to be moved into the unbundled charging structure

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Jonathan Kirby

Dec 12, 2012 at 12:25

Or maybe we are waiting for inter-platform re-registration to become a reality to move people on to better propositions?

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Bob Donaldson

Dec 12, 2012 at 12:30

Will Skandia still be around in two years time!

There are going to be winners and losers both throughtout the advisory community and in the life assurance industry. If skandia has not been able to make a profit over the last year with the legacy assets will they make a profit going forward.

If they don't then Old Mutual; could easily sell them off. Whilst I hate to be doom and gloom merchant the industry is going to go through such that it is hard to pick any company which will be left standing.

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l'ifa passeport en provenance de France

Dec 12, 2012 at 12:51

Skandia , standard Life etc ......why are we not getting these problems with Transact?

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Chris Moseley

Dec 12, 2012 at 16:18

Knowing Skandia they probably just haven't got around to processing the forms that have been sent in.

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SJH

Dec 14, 2012 at 18:34

I am a big Skandia fan - they helped turn my own business from an "also ran" to a very successful and profitable one. The guy that provided the help and support has now accepted the redundancy and left and his enthusiasm will be missed.

I met with their MD, Peter Mann a few weeks ago, and it struck me how much interference they are getting from OM in South Africa. There have been rumours circulating about the viability of SIS in recent weeks, i guess mainly started by their competitors.

• Will they take on their own advisory team (International Adviser on 29 November for one) and poach IFA clients - sorry, assist ex IFA clients who find themselves without an adviser. My now ex Skandia Investment Solutions Consultant says that while Peter Mann is around, they won’t but he’s only likely to be around for another 3 years, and then who knows?

• They are haemorrhaging cash at the mo – there’s no way they can survive on that new charging structure and stay afloat without the rebates they were receiving.

• They’re not interested in being a big player for IFAs. They see themselves as a big player in the Restricted market and not competing with Wraps for IFAs, hence the push on OM funds and the new series of “managed solution” funds and the reported focus on selling these funds on price.

I’m not sure of the validity of these claims, but I know Skandia people read these pages and indeed join in using pseudonyms - what’s really going on.

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CardiffJock via mobile

Dec 16, 2012 at 17:01

@knightrider

I think you can do top ups post RDR to the bundled charging structure and retain it, I.e on the £68.50 pa charge. It's just you'd need to agree any adviser charge (initial or ongoing) for that slice.

Got all of my adviser charging forms in last month so ready to face next year... I for one have invested a lot of time and effort in going with Skandia/OM so hope they come good and prove the naysayers wrong.

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SJH

Dec 16, 2012 at 17:12

THis is incorrect @CardiffJock.

If client is in original Commission version (SIS1) and they top up, the top up will go to SIS3, being unbundled and the commission on SIS1 will stop. If they have moved to adviser charging (ie SIS2) existing investments can stay on SIS2 and retain the Platform fee, but the new investment will go to SIS3. You should be able to run comparisons to see if existing monies would be better on SIS1 or 2, or move to unbundled SIS3.

My view is that until they introduce family discounts in the 2nd quarter, most clients will be better where they are.

Simples!!

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You must be joking

Dec 17, 2012 at 09:47

SJH - whilst your analysis may be 'simples' it is also incorrect!

The correct situation is as follows:

SIS1 is commission based - thus pays trail commission. For ISAs and CIAs, the first advice event post 18th December (skandia are ahead of the curve) will turn off the trail, but Skandia will (with the client's written authorisation) convert this to SIS2 which is still bundled and still has the £68.50 fee to facilitate adviser charging.

Top-ups CAN be made under SIS2, for those clients who had that specific tax wrapper pre 18th December (i..e it wouldn't be a top-up otherwise).

Alternatively, if it is in the client's interest, the top-up and existing holdings can be converted to SIS3, the unbundled charging structure.

All new business, after 18th December (defined as either a new client or a new tax wrapper for an existing client) will be written on SIS3.

Hope this clarifies matters, but if you need more information, the link is:

http://www2.skandia.co.uk/Adviser/adviser-support/to-RDR-and-beyond/cut-off-dates-and-instructions-for-pipeline-business/

YMBJ

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CardiffJock via mobile

Dec 17, 2012 at 10:49

@ Youmustbejoking

Exactly right. As all my clients' accounts will be on SIS2 I can top up existing accounts on £68.50 basis.

This is attractive to me as a fair chunk on my clients' funds are in passives.

Does go to show that there's a fair bit of confusion out there!

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Michael Brown

Dec 17, 2012 at 10:56

@ Youmustbejoking

Dead on apart from you can have nominated trial up to 1.5%. It depends what you choose on what you offer me thinks!

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SJH

Dec 17, 2012 at 11:25

I stand corrected.

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You must be joking

Dec 17, 2012 at 12:01

@ Michael Brown

You can indeed, however nomintaed trail is still classed as commission - check your terms of business with Skandia.

You can, of course, switch this to adviser charge of up to 1.5% if your client signs the Adviser Charge form.

YMBJ

@ SJH

There's a lot of good reading on Skandia's website :-)

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Michael Brown

Dec 17, 2012 at 12:37

YMBJ

Yes and all signed up at where they were before.

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