Devotees of financial services and the twittersphere cannot have failed to notice Standard Life is celebrating the 10-year anniversary of its wrap. The recent announcement of the group’s acquisition of Axa Elevate offers an opportunity unprecedented in this decade long history. This week, we look at the implications of the acquisition and what lies ahead for the platform.
Standard Life has long placed great importance on being innovative. The recent development of its “Investment Hub” is a response to the rise of outsourcing by advisers. The hub offers a different level of service, reporting and choice of investments and funds to both third party discretionary fund managers and advisers using model portfolios. The decision to build a separate platform, fit for purpose on its own but fully integrated with the wrap, is evidence of smart thinking.
Standard Life will now have to apply these smarts to its recent acquisition of Axa Elevate (it is worth remembering that this acquisition still requires FCA and shareholder approval, although we don’t envisage there being any problem here). If it handles the acquisition well, it will become the largest adviser platform by assets: Standard Life’s assets under administration stands at £27.53bn and the combined AUA of Axa Elevate and Standard Life is £38.36bn (as at Q1 2016).
However, any initial euphoria at the scale of the opportunity is surely being tempered by speculation in the press over whether Standard Life can pull it off without haemorrhaging Elevate users.
Elevate net flows data shows that, despite a fairly prolonged period of uncertainty over ownership, there have not been large outflows. Assets the platform increased this quarter but only marginally.
From our own research with advisers, Elevate users seem to be waiting to see what Standard Life’s plans are. One adviser we spoke to told us: “Standard Life is not my first choice… but as long as it doesn’t affect the functionality, charges or service to clients it’s OK.”
Much will depend on whether Standard Life decides to integrate the Axa Elevate platform with its own. If this happens, we would expect it to bring Elevate’s charges into line and for fees to increase.
Standard Life argues it can learn from elements of Axa’s proposition. Elevate’s service levels are highly rated. Indeed, according to one adviser: “Service is tip top – on the phone, you always get straight through. Our rep is very good and I don’t want to lose her in any integration process.”
However, good service costs money and that must have been a contributing factor in the failure of the platform to turn a profit for its French owners. The key for Standard Life will be learning from Axa’s approach but successfully streamlining service costs.
Standard Life’s commitment to the market and its investment in its platform are acknowledged by Elevate users, and many are prepared to wait and see which way the wind will blow. They are particularly keen to see “communication [from Standard Life] is of a high standard”.
Standard Life tells us it is embarking on a consultation process where it will gather the views of Elevate users to inform its approach. It is equally important to keep communication channels open and to keep its own users abreast of its plans. They may worry that integration will place a strain on service and support.
After such a successful 2015, we would caution Standard Life not to allow this acquisition to become an enormous white elephant. But if it can get it right, the future looks bright for the platform and the combined user-base.
Miranda Seath is senior researcher at Platforum