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Friends looks at way ahead

Speculation over whether Friends Provident will sell parts of its business or become a takeover target has knocked advisers’ confidence in the insurer.

Following its failed merger bid with Resolution and chief executive Philip Moore’s resignation, Friends has hired Goldman Sachs and JP Morgan Cazenove to advise on strategy as it undertakes a review of its business.

Alan Steel Asset Management director Graham Currie believes that Friends needs to reinvent itself and capitalise on its investment management capabilities through F&C.

Currie says: “I said 10 years ago that I could see life insurance companies becoming administration companies unless they reinvented themselves.

“I do not think that Friends Provident has anything to offer so I have not used them for 15 years. As one of the bigger players, I thought they would have been able to see this coming but they were totally unaware.”

Anand Associates financial architect James Brook says speculation about Friends’ ability to fund new growth is also damaging confidence.

He says: “My first concern with Friends Provident or any product provider is financial security. Advisers will not use companies without financial strength, as we saw in the Equitable Life situation, and the Northern Rock share price falling this week also shows this. Confidence is key in the financial services profession.”

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