We thought long and hard before bidding for Elevate, so it was surprising when I was told by a well-known industry figure “they knew” Standard Life would buy Elevate. This made me reflect, “was it really that obvious?”
At the helicopter level, perhaps so. After all, Standard Life is a well-capitalised business with the cash to fund the acquisition and platforms have become critical infrastructure for the market. Well-established in the market, the business has the knowledge and expertise required to absorb another platform business and the ability to create operational efficiencies through existing operations.
However, step out of the helicopter and things seem rather less obvious.
There was no immediate commercial imperative. Standard Life has the strongest organic growth in the market with gross inflows per annum broadly equivalent to the total assets of the 15th largest platform in the market. Net flows are approaching 80 per cent of gross flows demonstrating strong persistency, so outflows are not a problem either.
Similarly, the technology challenges being faced by a number of platforms across the market would surely make anyone reflect on acquiring another platform. I am, indeed, on record as saying dealing with the technology challenges is the single biggest concern in any platform acquisition.
Finally, there are the cultural and propositional aspects of bringing two platform businesses together. Platform propositions vary across the market, underpinned by widely varying core belief sets. “Pile ‘em high and sell ‘em cheap” rarely sees eye-to-eye with high touch personal service.
Pulling these threads together, the obvious conclusion was to be very careful when selecting potential partners, but also very bold in execution to ensure we could secure the partner of our choice.
This is why this is the first major deal involving two top 10 platforms. Quite simply, we wanted to have first mover advantage. Elevate was our preferred platform.
David Tiller is head of adviser and wealth manager propositions at Standard Life