My role as Readers' Editor includes taking an alternative view on current issues through the eyes of an IFA. Recently, the opportunity arose to allow me to interview Standard Life chief executive Sandy Crombie.
I focused on the concerns of clients and Standard's view of the market now and after depolarisation.
When I worked for one of Standard's competitors in the early 1980s, I found the attitude of Standard's salesforce irritating but in many ways motivational. I had thought this superior attitude had been put to the sword but Crombie's comments left me unconvinced.
Initially, I asked him to tell me why any IFA should be using Standard Life. His response was indirect and in some ways indicated that the new attitude is better but the strategy has not really changed.
In short, Standard is still operating on a basis similar to “no one ever got fired for buying IBM”. I regret to inform say that I remember the IT director at the national IFA that I worked for being fired for doing exactly that.
Standard's position seems to be that, as one of the biggest providers to the IFA sector, its job is to remain first choice. Crombie does not reveal a lot of detail as to how he plans to achieve this, other than saying: “I do not see Standard Life adopting any different stance in the future than it has in the past of trying to be the best at what it does and trying to be IFAs' first choice because it is such a big part of the business.”
Personally, I cannot see that Standard understands the market or where it is going. With plans for a flotation in the offing, this will not impress the City.
Its lack of a unique selling proposition leaves it with a challenge.
When I asked how the potential reduction in IFA numbers could affect Standard, Crombie said he does not feel that the market will reduce in size although there will be fewer firms. He considers that depolarisation will change things but which way and to what extent remains to be seen.
In terms of multi-ties, Standard wants to take part but wants to win links on merit and on commercial terms.
Crombie sees the core of the business as still dealing with independent advisers and he expects the top end of the market to retain its volume and sees the top end of customers in the main wanting to be served by IFAs.
Given that the buzz word nowadays is wrap, we then moved on to Standard's plans in this area. Crombie said he recognises the need to give adv-isers access to a platform that will strive to be the best in administration. Providing access to the best fund management and exclusive deals will also be a draw.
Despite this, I remain unconvinced by any of the wrap proposals so far and the reliance which providers are placing on them seems to be still moving in line with the “me too” approach. Perhaps they need to test the whole idea with consumers before they nail their colours to the mast.
Crombie said he feels the loss of with-profits as the default option for investors will mean that clients' need for asset allocation and regular reviews will intensify.
It would have been remiss of me not to raise the issue of investing in IFA firms. In my opinion, Standard has traditionally avoided innovation, preferring to watch from the sidelines. I told Crombie this means that others have potentially gained first-mover advantage but he disagreed, confirming that Standard will not invest in an IFA unless it is an acceptable investment.
He went on to say that given that IFA businesses are entrepreneurial in nature, a big corporation such as Standard is not equipped to run businesses of that type.
Crombie recognises the need to get close to IFAs but he seems to see workshops as the sole method or certainly the best option. When I suggested that some hands-on help could be better than soft loans or workshops, he told me it would be arrogant of Standard to think it can tell IFAs how to run their businesses.
He said Standard runs workshops to help IFAs think about their business and business development. Probably my fault but I think he missed the point I was trying to make, in that interacting is better than lecturing and the latter carries more risk of appearing arrogant than the former.
I then raised the topic of demutualisation. Currently, only with-profits policyholders stand to benefit and it seems this will not alter.
Crombie recognises that investors may choose to leave immediately after the event, but he hopes to keep customers by striving to be the best at delivering customer service. The brand remains a key plank in its offering, standing for excellence and administration.
Acquisition is not necessary but Crombie sees it as an option.
In conclusion, Crombie said he sees no institutions that can replace IFAs. He predicts that a certain number of IFAs will come together but then the good ones will break off. It is a people business and people find it easier to trust other people rather than institutions.
In a nutshell, Standard believes that scale and brand are enough to be going on with. I just wonder if the City will agree.