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Just say no

Why vote for demutualisation when Standard Life is thriving again?

For too many years you have had a bad press. As a fellow practitioner, you do not need me to rehearse the arguments. At times, that bad press has been more than justified. Now, however, the day has come for us to redeem ourselves. It is called the Standard Life vote. Today, you are in the driving seat. It is your call on whether clients should vote for or against the proposal for demutualisation.

This is going to be instrumental to the fate of one of Britain’s oldest and biggest insurance mutuals.

I suggest that you consider recommending a “no” vote. Let me explain why.

First of all, you will gain credibility. This is not because you are asking them to vote no but simply because you have shown beyond question that your motives are in their best interests. There is no sale involved. No personal gain. It is all about putting the client first – the way it should be. I do not think that we need to be embarrassed at the idea of gaining credibility. For years, most of you have behaved exactly this way and with little credit. Naturally, I do not expect you to buy into voting no just on this argu-ment. The real test for me is to ask how clients benefit.

Perhaps the best place to start is to look at the reasons that Standard has given for its about-turn. Remember that it was only five years ago that the board were saying Standard should remain a mutual. I did too. I backed them up to the hilt, as so many of you did.

This year, the board tell us things have changed. As an example, they cite the trend for with-profits beginning to fade in popularity as justification in favour of a yes vote.

Standard tells us in its document, Answering Your Questions, that “With-profits products are no longer as popular in our main UK business as they were”. No rocket science there then.

They neglect to mention how their main competitor Norwich Union has begun the process of reinventing with-profits. NU has chosen to reignite interest by offering an RPI guarantee on the with-profits investment bond. This is just the beginning of how companies can and should find creative ways to inspire greater confidence in an investment that for some people has a place in their portfolios.

But let us say you are not fully convinced yet. How about we examine Standard’s business risk argument? It goes something like this. The pool of with-profit policyholders is expected to shrink. This means that fewer investors are left to carry more of the risk of new ventures. I guess these new ventures include Standard Life Bank and SLI . In my view these with-profit funded operations are both runaway success stories.

Perhaps Standard would like to tell us of the duff investments they have made and the cost they have caused with-profits policyholders to date. That way, both you and I could give our clients a more rational argument about these risks.

I suspect they will not be forthcoming, so let me move on to another fact that means you and your clients should vote no. It is called profitability. Here are just three pointers that clearly demonstrate that Standard has never looked so good – leaner, fitter and now back in the black.

Profits, based on recent results are roughly 11 times better than the previous year. The balance sheet has improved by a mighty 27 per cent, which means that the sick state of our once great insurer is showing signs of a tremendous recovery.

There was a great philosopher called Spinoza who once said: “No matter how thinly you slice it there are always two sides.”

It’s about time we got to hear a lot more about this proposal. I don’t know about you but I feel that policyholders and advisers have been treated as though the Standard vote is all a foregone conclusion.


Online teaching aids from Sesame

Sesame is working with the Chartered Insurance Insti- tute to create a series of online teaching aids which they hope will “help drive up standards of professionalism and good practise across the industry”.The teaching programme is being set up to extend adv-iser knowledge in areas such as investments, pensions, protection, mortgages, mortgage-related general insurance, taxation […]

A tight turn

Millfield’s disclosure that its talks with a buyer have fallen through and that it has now brought in turn-round consultants poses the questions of why did the deal fail and can the consultants revive the business?


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