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Standard Life ‘missing a trick’ by failing to target wrap at consumers

by Jun Merrett on Jan 30, 2013 at 10:26

Standard Life ‘missing a trick’ by failing to target wrap at consumers

Standard Life has been accused of ‘missing a trick’ by targeting its wrap at IFAs and not launching a direct to consumer execution-only proposition, by analysts at Société Générale .

In a note to investors SocGen analysts said the Standard Life Wrap should not restrict itself to advisers when research showed around a third of investors ‘would never pay for advice’.

It said Standard Life senior management were nervous about a direct to consumer platform as it could alienate IFAs who would view it as a threat.

‘We think there should be a direct to consumer version of the platform. However, management is on tenterhooks over the matter, fearful of generating friction with their own IFAs, who are likely to perceive such a move as a threat to their business, having accused management of wishing to steal their book of clients in the past,’ it said.

Standard Life is missing a trick in our view by restricting the provision of its platform to individuals choosing to use an IFA. A significant portion of the market is not willing to pay for financial advice. Surveys suggest around 30% of individuals “would never pay for advice”.'

SocGen was also critical the wrap’s reliance on third party technology provided by FNZ, which it said was free to sell its technology and implementation experience to Standard Life competitors.

The note said this ‘major flaw’ meant Standard Life had a first mover advantage but not a competitive advantage and pointed out that AXA Wealth also use FNZ’s technology to power its Elevate wrap.

It predicted that due to its competitors being able to catch up with it technology-wise, Standard Life, like other platform providers, would need to give more of its margin away to IFAs to attract and keep them in order to hit profitability.

'Our key concern with the business model is that IFAs can be bought with the lure of higher profits on other platforms,' it said. This would be possible if a competitor utilises similar underlying technology more cheaply or effectively, allowing advisers to charge a higher proportion of their total charge, or if the platform levies a higher total charge to the individual customer.’

The analysts also predicted a cull of platforms from the current 22-strong players in the UK at the moment.

It said: ‘Using Australia as an example, where the financial services industry has had its own version of the retail distribution review. The number of platforms in the market shrunk to around eight platforms. We believe the UK is likely to see a similar trend as IFAs move from using multiple platforms to being more selective.'

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9 comments so far. Why not have your say?

DS

Jan 30, 2013 at 11:39

Accused seems like the wrong word. It's a bit strong you know? I doubt that Soc Gen came out said "Standard Life, we accuse you of not marketing your products correctly. How do you plead?"

Is it just me or is City Wire tending to sensationalise their stories more now?

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Mike Morley

Jan 30, 2013 at 12:20

@DS Now we are all "New Model" advisers I guess they think that the only way to continue to attract attention is by doing just that!

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Julian Strauss

Jan 30, 2013 at 12:33

Soc Gen seemed to have failed to realise that the Standard Life Wrap is targeted more towards the HNW side of the market where clients have complex financial planning requirements and are generally more than happy to pay for proper advice. Equally, when other Platforms are aggressivley pursuing D2C models alongside the IFA offering, many adviser firms may take the view that using a Platform that does not offer D2C could be a good addiontal way of protecting their business. I hardly think that is missing a trick!

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Monday Morning

Jan 30, 2013 at 12:37

Whilst talking about "New Model" might it be worthwhile journalists not re-hashing an opinion expressed in a press release to get column inches. Instead they could provide some realistic commentary and insight based on knowledge, skill, and professionalism.

Perhaps I am missing the point?

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SJ

Jan 30, 2013 at 12:56

Has anyone at Socgen had any experience of operating a standard life wrap account? I doubt if any consumer would be inclined to use it in its current format. The are no kiids, no pretty graphs or links to morningstar or FE.

Why would a DIYer be attracted to Standard Life in preference to the cheaper HL or Fidelity offerings?

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YvonneGoodwin

Jan 30, 2013 at 14:54

Standard Life are already doing this. I took on a new client two years ago who already had Standard Life wrap that a "very nice salesman from Standard Life" had sold him and his wife - they had a drawdown pension each worth around £30k and it was all in cash.

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Richard Hardy

Jan 30, 2013 at 16:36

An execution only Wrap? Mention the word Wrap to the general public and the first thing they'll think of is chicken.

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Mr Balis

Feb 08, 2013 at 09:19

SJ, have you actually see one from SL Wrap??

I don't think so! (I have one)

There are links to the fund manager web site for Funds Fact Sheets and separate KIIDS....

maybe you saw one many years ago when KIIDS weren't there.....

Or if you have one, your IFA has chosen a limited view for you!!

Don't forget: WRAP is un-branded (you won't find SL logo anywhere) and the specs and permissions are chosen by IFAs themselves for their clients.

Also, Soc Gen, likewise many, seem to ignore that SL 'HAS A D2C PLATFORM' and its called Fundzone!

If you go direct they offer an ISA and OEIC via their Fundzone platform: more restricted fund universe than Wrap with only 2000 mutual funds, and the cheapest on the market (I think in line with Skandia) for both IFAs and D2C.

Before you criticise, get your facts right or refrain from doing it!!

Someone once said to me: is better to say now and look like you're s****d that open your mouth and remopve all doubts!

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Mr Balis

Feb 08, 2013 at 09:24

forgot to say, there is amention to FNZ selling SL technology to other providers.....

Nope, there are dedicated team for each of FNZ's clients (AXA, Black Rock, etc) and the codes for each platform aren't interchangeble and TM'ed so.... No they can't be used for othere platforms......

Wonder why people prefer to give false info just to make a sensational article than do their research and tell the truth..... there should be a regulator for them as well....

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