Geoff Towers, the man credited with building Standard Life’s platform business, is now exploring where Legal & General could fit into “the new wave” of the platform market.
As former Standard Life Savings chief executive, Towers took the assets on Standard’s platform from under £100m in April 2007 to close to £5bn when he left in March this year.
In his new role as managing director of platform and distribution at Legal & General, Towers’ focus will be developing “an aligned business model” for advisers, although he remains tight-lipped on whether this means that L&G will ultimately launch an IFA platform.
He says: “We are already quite a substantial platform player. People sometimes tend to lose sight of our shareholding in Cofunds and we have our own version of a platform for our banks and building society people. We hold £3bn of assets on our own platform so we are already material players.
“Do I believe there is another wave of platforms coming? Yes. Do I know what that is yet? No. One of the joys of this job is L&G is very interested in what the next wave of platforms will look like and how to get that alignment of interests between what the adviser and their customers want and what we might be able to provide.”
Towers says as part of his own due diligence before taking on the job at L&G, he questioned whether the company was committed to the platform market, or whether he was just hired as “window dressing.”
He says L&G’s 25 per cent stake in Cofunds shows the firm is serious about the wrap market.
He says: “We are really comfortable with the relationship with Cofunds. It would be difficult to see L&G competing with them. It is not inconceivable, and I would not rule it out. But when you have already got close partnerships with existing technology and existing knowledge you would be nuts not to access that and we do access that.”
IFAs and employee benefit consultants account for 65 to 70 per cent of L&G’s business, with 5-10 per cent coming from the direct channel and the remainder coming from banks and building societies. Towers has pledged this make-up will remain the same after the RDR, with L&G continuing to source the majority of its business through advisers.
He says: “I know some firms have decided they will go head-to-head with advisers and I can see a space developing in the market for advisers who have customers they no longer wish to serve, where providers may be able to help advisers derisk their business.
“But I do not think a firm that is massively dependent on IFA supporters does itself any favours by setting up in competition with them. I do not think that is right. Will we be looking at direct? Absolutely. But we will be doing it in support of advisers rather than against them.”
Towers believes customer-agreed remuneration will end up strengthening client relationships as customers will place more value on advice.
But he has concerns about how the advice market will look come 2013.
He says: “We are in danger of losing the simplified advice opportunity. The top end of the market will be fine, as they will be able to afford advice and will see paying for it as reasonable.
“For the middle part of the market the need for advice will become episodic, triggered by life events.
“But the bottom end of the market does worry me slightly. From a business point of view, it is difficult for the private sector to do anything, but from a social point of view it is a concern.”