Aviva says it can't see benefit in buying IFA distribution
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Aviva says it “cannot understand” why providers are buying up IFA distribution despite increasing its share in Tenet Group last month.
Chief operating officer David Barral says Aviva has looked carefully at acquiring more distribution but cannot “see the benefit”. He says investing in the firm’s propositions and service is a better use of capital.
He says: “Every time we have talked about this we cannot understand why providers are doing it. We have looked at it really carefully but do not see the benefit, quite frankly, for the distributor or for our shareholders.
“It depends on brand strength because if you are not punching your weight in the market or if your propositions are not strong enough, then securing distribution might be a way to get over some of that.
“We think we can add a lot more value to the business and to advisers by investing in our propositions and service rather than extending our reach into ownership of distribution.”
Standard Life recently acquired support services firm threesixty and has a stake in a number of IFAs. Aegon yesterday announced that its two distribution arms Positive Solutions and Origen lost a combined £2m in the first quarter of 2010 on top of a £16m loss for 2009.
Money Marketing revealed in April that Aviva, as well as Standard Life, Aegon and Friends Provident, had bolstered its stake in Tenet Group to around 22 per cent. Aviva paid £9.5m to take a 9.9 per cent stake in the IFA in 2002. In 2005, it increased this stake to around 20 per cent.
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Readers' comments (4)
SIMON MANSELL | 13 May 2010 12:07 pm
Aviva says it “cannot understand” why providers are buying up IFA distribution despite increasing its share in Tenet Group last month.
Of course not! Aviva has a poor product range, a legacy IT system and has failed to develop a platform. For Aviva the future is bright the future is tied!
Most “independent” advisers exercise independence and find reasons not to use Aviva. As a consequence Aviva have got into bed with Tesco’s and sought tied distribution etc. Further Aviva has sought to influence the ABI and the FSA to pursue RDR with the inevitable tied/restricted distribution consequence.
Pro RDR Aviva can then go back to the bad old days and buy distributions rather than win it through product quality and independent choice via the independent sector. Tenet have taken their 30 gold pieces and I suspect Tenet is well on the way to tied/restricted advice under the Aviva master plan and I can only hope that Tenet members wake up and smell the coffee.
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Exasperated me | 13 May 2010 2:22 pm
Can it understand why providers are using the 'inherited estate' (AKA mugged policyholders) to expand in Asia?
Of course it can.
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Anonymous | 13 May 2010 2:34 pm
I agree with Simons views. As a firm we try to avoid AVIVA. It is clear that they have been very welcoming to RDR so much so I'm suspicious. Simon hits the nail on the head with regard to wraps which in my view offers a future direction for the IFA. Is it not a coincidence that pro ifa Skandia left the ABI after disagreements. The ABI and remaining dinosaur life offices would be well served by the decimation of the IFA and a return to the tied sales forces that landed us in all the sins of the past. The ABI have the ear of the regulators.
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Anonymous | 24 Jun 2010 11:15 am
Mr Mansell, get your facts right for a change , Tesco and Aviva dropped all ties with each back in 2006. Tesco and Friends Prov now have a tie in.
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