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Direct response

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 nic@inspiredmoney.co.uk

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Comments

There are 5 comments at the moment, we would love to hear your opinion too.

  1. You’ll be glad to know I don’t have amnesia. Far from it; I remember only too well making investments in a number of IFA firms, since I was the one who recommended them!

    You’re right in saying we invested with the intention of supporting the IFA channel, which in our view required some much-needed capital. What we learned from that period, two notable exceptions being Tenet and Cavanagh, is that our support for the IFA market is better demonstrated in other ways. Investing in programmes like the Aviva Financial Adviser Academy, supporting over 6000 IFAs to gain their qualifications, the Aviva Wrap Adviser Transition programme, which assists IFAs preparing for RDR with business planning, customer segmentation, marketing and data mining skills, and The Aviva Future Adviser Programme, which helps attract new talent by promoting financial advice as a worthwhile profession to graduates. This is in addition, of course, to investing heavily in products, online services and our brand to help stimulate interest from consumers – and IFAs are the main beneficiaries.

    As for the hype around ‘direct’; let’s set the record straight. IFAs account for over 75% of Aviva’s business and will continue to be the dominant channel for many years to come. Orphaned customers look to Aviva for support, long after the original adviser has moved on, and as a responsible business you wouldn’t expect us to turn our back on them. This in no way implies a lack of loyalty or commitment to our IFA community. In fact we’re working with IFA Promotions to ensure orphaned clients have the opportunity to access an IFA through IFAP’s website and not just an Aviva representative.

    It may not be visible but we work relentlessly to promote our joint interests with the FSA and FOS. We have been a long-standing supporter of IFA Promotions, offering practical as well as financial support and work closely with AIFA recently sponsoring their 10th anniversary and currently carrying out joint research on how best to support future adviser models.

    These are not the actions of a company that wants to bite the hand that feeds them. Instead Aviva is absolutely committed to supporting IFAs before, during and after RDR.

    For the record, I’ve been at Aviva for 10 years not five and in financial services for 30 years. Personally, I’ve always been and always will be a champion of the IFA community. I think people who do know me will vouch for that.

    David Barral
    Chief operating officer, Aviva UK Life

    PS The closest I’ve got to La Liga is coaching Pannal Sports under-12s!

  2. An amazingly personal article, clearly unfounded and designed to elicit response. Mr Barral, your response is admirably restrained considering the authors blatant ignorance and disregard for the facts or the knowledge of your standing.

  3. Hi David, good to read your comments. It’s always great to see someone with the courage and wit to respond to people rather than to remain silent and stand aloof from the debate. I accept entirely that Aviva is doing great things with regard to helping IFAs: as you say, they are responsible for 75% of your sales.

    It’s good also that you now appear to be saying that all the many millions pumped by Aviva/Norwich Union into propping up moribund national IFAs only a few years ago was a dreadful mistake. It takes guts to admit to being the person personally responsible for that original decision.

    As for your CV, my apologies for missing oiut five years of your career at Aviva. Maybe you ought to take a quick look at it on your online Linkedin page, compiled by you presumably, in which there appear to be 5 missing years between 2000 and 2005 and aren’t down as having worked at Aviva.

    Nic

    PS: Jose’ Mourinho started off as a translator of other coaches’ instructions to the team, so there’s hope for you yet…

    Cheers,

    Nic

  4. Evan Owen - IFA Defence Union (for now) 21st May 2010 at 9:28 am

    Nic, your role is to provoke thought, nobody can deny that you are good at it.

    Keep up the good work, keep the life offices on their toes, show the world how they squander policyholder funds on all sorts of personal pet projects, and compensation.

    The FSA made rules regarding ‘investments’ in distribution, have they been complied with? Has the FSA been investigating these ‘investments’? Yes?

    Have life offices allowed IFAs to pick up the hefty tab of compensation for shortfalls created by them? Was a deal done behind closed doors with the FSA?

    It is a shady business isn’t it David?

  5. Philip John Clarke 24th May 2010 at 10:33 am

    Nic,

    As part of the “Aviva Corporate Strategic Plan” they formed a series of distribution relationships with over 20 building societies in the mid 2000’s.

    Might, I suggest that Andrew Moss CEO of AVIVA has coffee with David Barral COO of AVIVA to discuss distribution…

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