Mayor of London Ken Livingstone and Metropolitan Police Commissioner John Stevens recently told Londoners that the threat of a terrorist attack is closer than many may think.
“It's not a question of if but when.” The phrase should have been the stock response when clients asked whether Standard Life would ever demutualise.
My attitude to with-profits is hostile and this, perhaps, has coloured my view of providers who stick with this investment option, despite its failings.
Given the various instruments available in the market, it's just not necessary to create this type of smoothing. Anyway, how can you promote smoothed returns then apply a market value adjuster? This was explained to me by an Equitable actuary, who said the market value adjuster was fair because the client was in the same position as someone in an equity fund. When I asked him why invest in the with-profits fund in the first place, however, he was speechless.
But was it the reliance on with-profits that made Standard lose its way or was it because of its reluctance to recruit anyone at a senior level from outside the company? When firms operate such an inbred management style it inevitably leads to problems – look at Marks & Spencer. By bringing in talent it has started to move forward and this is something Standard need to consider before the City does it for them.
This was a company that prided itself on not being innovative. This was fine in the latter part of the 20th Century but is not good enough for a firm wanting to prosper after the millennium. Standard has the scale to succeed but it needs to rationalise its products and focus on what it does best.
With depolarisation almost here, providers must decide if they will manufacture or distribute? I would contend that, with the exception of Prudential, providers must choose because undertaking both is not a realistic option.
Post-stakeholder, marginal costs are such that remuneration shapes are nearing the end of their life. Standard has taken a long-term view to allow the IFA to receive commissions similar to that available pre-stakeholder, but that cannot last for ever. Standard needs to be more involved in IFAs' businesses by offering business development training. Servicing IFAs in a manner similar to fast moving consumer goods is essential if we are to develop more adult relationships between adviser and provider. Let's just hope the arrogance, which got Standard into this mess, has been expunged.
Robert Reid is a director at IFA Syndaxi