Skandia to cut 150 jobs to lower wrap costs
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Skandia has revealed it is to cut 150 jobs as part of plans to cut costs by 20 per cent and target a platform charge of 0.5 per cent.
Skandia says any platform wishing to be sustainable going forward will have to keep their costs and profit margins at 0.5 per cent per annum of the funds they have under management.
It is now implementing a transition plan which will result in a reduction of its operating costs by around 20 per cent by the end of 2010, and it anticipates that there will be around 150 job losses over the year.
The provider says costs will be reduced through improved systems and processes and that the cost-cutting applies to those head office areas that do not directly support Skandia’s IFA proposition or its customers.
The news comes after Skandia revealed in November that it was proposing to close nine regional adviser support offices and 100 sales staff were likely to face redundancy as a result of the closures.
Skandia chief executive Nick Poyntz-Wright (pictured) says: “As margins in the industry tighten we are determined to focus on highly valued areas and that requires us to have a disciplined look at all our other costs to ensure these are managed so that we can always prioritise the ’front line.
“Over the last few years we have invested significantly in adding straight through processing and automation to our support services. Other providers who have not made the investment, not switched from legacy systems and not embraced the lower margin model will struggle in the future. In short, ours is a sustainable model; many others are not.”
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Readers' comments (19)
Anonymous | 15 Feb 2010 4:17 pm
Cutting cost, and cutting costs, it makes you think how many wrap platforms will survive and operate profitably post RDR. It also appears a price war is ahead, is this a good thing when you consider how many assets it takes to make a profit.
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Mr Smith | 15 Feb 2010 4:18 pm
Well it was nice working with John Wilkinson!
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john | 15 Feb 2010 4:20 pm
Adding processes to a model which pays the platform via a scrape on assets might not have been the best thing !
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SIMON MANSELL | 15 Feb 2010 4:21 pm
That 150 jobs down, 10,000 IFA's to go! This is a direct result of RDR! I trust that will be 150 people who won't be voting for Gordon Brown and his storm troops at the FSA. I also hope the Conservative will see how many votes ate at stake with Mark Hoban's MP's fence sitting.
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Anonymous | 15 Feb 2010 4:29 pm
Another once great product provider goes down the slippery slope of cutting staff, when will providers learn that this does not work,IFAs and investors need good service standards. Ever since the closure of branch offices and the loss of broker consultants in the field Skandia has become just another provider with mediocre admin support services. Heros to Zeros in just 2 months, that's some going.
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Mel. Rhoades | 15 Feb 2010 4:45 pm
Another nail in the coffin of consumer advice, Skandia, in the past hasve always said that cost is not the be all & end all of providing a service to the client and I have always agreed with that. providing the service is of a standard expected, the client will pay the cost and appreciate the value. By Skandia aiming to cut costs, it's service standards WILL decrease, and consequently will receive lsess new business. A downward spiral!
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Steve | 15 Feb 2010 4:53 pm
Skandia have at least realised that their business model isn't sustainable. Having great technology is one thing but the harsh reality is that the wrap phenomenom (which has been sold so effectively by the Skandia sales force) is finally being found out for the overpriced fad that it is.
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snooks | 15 Feb 2010 5:08 pm
Sknadia's model is flawed. They won't unbundle honestly until they show us exactly what their deals are with Investment Houses and pass the deal on to our clients entirely.
Flaw number 2 in the Skandia method is that they don't like IFA's much anymore and they still think that they are product providers- they aren't working alongside IFA's.
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Anonymous | 15 Feb 2010 5:40 pm
No loss here then. Only if you supported this flawed proposition would they support you irrespective of a 10 year business relationship. As for PW who knows no decent IFA will employ the empty vessel making most of the noise.
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Anonymous | 15 Feb 2010 6:13 pm
Skandia up for sale real soon now...
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