Although I have read his comments in Money Marketing and the rest of the trade press many times in recent years, I have never met Aviva UK’s chief operating officer David Barral and don’t really know him.
Until last week, I’d generally seen him as someone who holds down a tough job and does it competently, catching the flak for Aviva in a number of cases where the company has been forced to relay bad news to the public, such as announcing reduced endowment payouts or a block on property fund redemptions.
Then, suddenly, as I was reading my Money Marketing, David Barral’s name popped up yet again, telling us that Aviva had “looked carefully” at acquiring more distribution but couldn’t see the attraction.
“Every time we have talked about this we cannot understand why providers are doing it,” he was quoted as saying. “We have looked at it really carefully but do not see the benefit, quite frankly, for the distributor or for our shareholders.”
For a minute I was nonplussed. Then a possible explanation emerged: according to his CV, David Barral has been at Aviva, and Norwich Union before that, for just five years, first as the company’s distribution director, then as its main marketing man and, since December 2009, as chief operating officer.
Having only been at Aviva since 2005, David obviously has not been schooled in the company’s very recent history with regard to the many millions, possibly tens of pounds it has managed to sink into a raft of IFA firms which subsequently failed.
You only have to look back to 2002, when Norwich Union, as it was back then, joined Aegon, Friends Provident, Scottish Widows and Skandia to pump £17m into Millfield, a company which at the time had racked up £7m in losses.
Almost at the same time, this identical quintet dug deep in its pockets and raised millions towards a £20m rights issue by Berkeley Berry Birch, which by then had somewhat negligently managed to lose £39m in the same year.
Then there was Inter-Alliance, which raised £32m in 2002 – and promptly registered a £24m annual loss. Inter-Alliance then rattled the collecting tin under the same providers’ noses the following year, collecting a similar amount in 2003 from more or less the same companies as above, minus Aegon and plus Gartmore and Merrill Lynch.
In October 2004, Norwich Union handed over £13m to Lifetime, the Millfield online personal portfolio service, raising its stake in that business from 49.9 per cent to 70 per cent. Almost a year later, Millfield finally sold off its remaining holding to NU for a further £9m, plus a further potential payment of £6m.
Given this incredibly recent history, it is puzzling that David Barral is unable to work out why other providers are paying some of these firms. After all, a quick look at his own company’s increased stake in Tenet, helpfully referred to in the same story by Money Marketing’s award-winning reporter Helen Pow, ought to give him a small clue.
The reality is that in many of these cases, what the big life companies are doing is not so much buying additional distribution but helping to prop up large IFAs that would otherwise collapse. The experience has less to do with supporting a vibrant IFA sector and more to make sure that it does not die on its feet, harming their sales along the way.
What is also clear is that Aviva’s decision to step away – to what extent and for how long is still unclear – from its long-running subsidy of loss-making IFAs is driven by its proposed move back into direct sales.
Last year, the very same David Barral was quoted elsewhere as saying that Aviva predicts numbers of registered individuals will fall from 21,000 to 10,000 by 2013, as advisers find themselves un able to comply with RDR changes. Given this prediction, the company clearly wants to plug the “advice gap”.
Which is why Aviva is boosting its existing directsales team, with the aim of reaching out to its 2.7 million “orphan” clients. Half of those clients came in via the earlier NU salesforce, the rest are originally IFA clients whom Aviva assumes are no longer in touch with their independent adviser. How sensible this strategy really is remains to be seen.
But anyway, back to David Barral’s troubling amnesia about his company’s recent past. How is it possible that he doesn’t know about Aviva “investing” in all these IFA firms such a short time ago?
I may have an answer: some readers will recall how in 2006 the Beeb mistakenly interviewed live on air a Congolese guy who had turned up for a job interview at Television Centre. They assumed he was a totally different, well-known IT expert there to give his opinion about Apple computers and whisked him straight onto the studio. The resulting interview was a shambles.
Could Money Marketing’s Helen Pow have made the same mistake as the BBC? Is it possible that the person interviewed by Helen was not Aviva’s Barral at all but David Barral Torres, the striker who currently plays for Sporting de Gijón in Spanish football’s La Liga?
It’s the only explanation I can come up with…
Nic Cicutti can be contacted at email@example.com