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Skandia platform profit hits £10m for H1

Old Mutual Wealth’s pre-tax operating profit for the first half of the year was up 11 per cent, from £108m in H1 2013 to £120m this year, as the Skandia platform posted a £10m profit.

The business saw year-on-year net inflows increase 50 per cent in H1 2014, from £800m to £1.2bn

The Skandia platform made a £10m profit for the first six months of the year, up from £2m this time last year. It made gross sales of £2.5bn, up 11 per cent on £2.3bn in 2013.

Old Mutual attributes the growth largely to demand for its WealthSelect range, launched in February, and Spectrum. WealthSelect generated £160m in net inflows and says a further £65m was added in July.

Profits at fund management arm Old Mutual Global Investors doubled to £16m.

The firm acquired Intrinsic in February. It says integration costs will show in its H2 results.

The firm adds it expects to complete its rebrand to Old Mutual Wealth and move away from the Skandia label in September.

Old Mutual chief executive Paul Feeney says: “Our focus is on building investment solutions that meet different customer needs. We believe that is what people need to help them secure their financial future and these results are a good endorsement of that strategy. 

“The launch of WealthSelect this year is an example of how we can use our platform and asset management expertise to build a service that gives advisers a range of managed portfolio solutions aligned to their clients’ needs.

“The acquisition of Intrinsic during the period was a significant milestone in our plans to become a leading investment solutions provider. Building the solutions is one thing but we need to make them more accessible to people and have a direct understanding of what they want. Intrinsic enables us to do that and is an important addition to our business.”

Sales fell at the Skandia international business, from 4 per cent from £931m to £892m. It includes the firm’s Latin American and South African business and Hong Kong and Singapore.

Its European business made a £14m profit, up 27 per cent year on year from £11m. 


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There are 7 comments at the moment, we would love to hear your opinion too.

  1. Not hard to do when you treat customers so shabily!

  2. Pete

    I disagree. The reason they are making money is precisely the opposite in my experience – peerless service and the desire to help advisers and do the right thing by customers. A very rare thing – would that other large providers did half as much.

    Admittedly I don’t use some of their dumbed down offerings – Wealth Select and such like, but if you just use it as a plain vanilla platform it isn’t bad – not perfect and plenty of room for improvement – but it is their service and the staff that one interacts with that makes all the difference. – And WHAT a difference.

  3. I’m pleased you haven’t shared my experience Harry.

    I should point out that I’m not a financial expert, just an ordinary saver who is trying to keep abreast of this industry for fear of losing even more of my savings. I trusted Skandia with a large amount of my savings in one of their so-called ‘wrapper’ products. I imagined they would only include investment choices that were reputable. When the fund I selected went down I asked them about their criteria for the inclusion of funds and under what circumstances they would remove a fund. Their reply shocked me.

    “With regard to your question in respect of the potential removal of any fund, I have previously confirmed the basis on which Skandia would take action, i.e., only where a fund no longer meets the definition of a collective investment scheme or could not meet Royal Skandia’s own internal administration requirements, would it be removed.”

    I queried if they really meant that there is not even a requirement for the fund to be legal, let alone risky or falsely advertised. They confirmed that was the case.

    What was even more surprising was that they were aware of the diificulties about to beset the fund (in their portfolio) and failed to warn me or my IFA. If I’d known the facts I could have made an informed decision.

    They’ve lost my trust and I’m sure there are countless others like me.

  4. Pete

    I do sympathise. I have seen these ‘Wealth Select’ and ‘Foundation’ offerings. I actually tried to research one, but there was scant information.

    These have been introduced merely to:

    a. Help those advisers who don’t have much of a clue about investing and shouldn’t be involved anyway. It has also been offered to those such as yourself who want to go DIY. I understand your reasons and it is a sad refection on this business that you had a poor experience with an intermediary. However like any other field there are good and bad and I do know that there are plenty of the good. That you didn’t manage to find one is a pity.

    b. Make Skandia more money. They make a better margin on these funds.

    Their Self Select range is the one any decent adviser would use and there are plenty of funds to choose from. Unfortunately many DIYs don’t have the knowledge or expertise and that’s where a decent adviser becomes cost effective. And remember there is nothing like having regular reviews (either half yearly or annually) and adjusting investments in the light of circumstances.

    So I understand your dissatisfaction, but it really isn’t all down to Skandia. Yes, you may well get a poor service. Not that I excuse it, but I do understand. You may have thousands with them. Intermediaries often have several million – and do very regular business – hardly surprising therefore that we will get a better service. That I’m afraid is life.

  5. Harry

    Although I don’t have experience in the financial services industry, I do have a good business background. I wasn’t a DIY investor, I used an IFA. However, the IFA (like most) is not party to all the inner politics and the (often London centric) presentations hosted by the FSA/FCA. Skandia is a huge international company and they are (or should be).

    Skandia was aware of the issues with my class of investment (one of their senior executives had in depth knowledge). They accepted the investment class and when the FSA raised concerns they failed to share those concerns with my IFA, or any others as far as I know. They did nothing.

    My take on the Skandia ‘wrapper’ initiative is that by not owning the products they sell, they can pass cost and risk downstream to IFAs. However, ordinary consumers trust their brand (foolishly) so they are trading on a past reputation. The CEO at the time joined them from a services business and made a big song and dance about how transitioning Skandia to this business model would increase profits. It has done precisley that at the expense of its previous good reputation for customer service and quality products.

    When things go wrong, there is a tendency for everyone to blame the IFAs. They are the soft target for the larger oganisations and regulators. This is an important component of the risk reduction strategy in Skandia’s model. It is wrong and if I was an IFA I would steer clear of them. As a consumer, I certainly will be if I ever get my money back.

  6. Yes I agree that the Old Mutual version is perhaps not as ‘cuddly’ as the old Skandia. I too had (and have) my concerns as I’m no fan of Old Mutual, but still hope that enough of the old Skandia will prevail.

  7. Interesting comments from the customer perspective (Peter Lihou) about what the ‘Skandia’ brand meant to him and how he felt let down. This from the period when Skandia were trying to combat the threat to their IFA business from the likes of Transact, Nucleus, Ascentric etc by being more like an open architecture platform. These are all brands that no consumer had ever heard of but despite that (maybe because of) these platforms had the highest growth rates in the IFA directed market. Now Skandia has set the clock back and returned to vertical integration where the product is the investment service and not the platform delivery mechanism and returned strongly to profit as a result. No doubt there are some (maybe many) consumers who don’t trust their advisers or don’t expect them to be up to speed with what the regulator is concerned about or fully understand all the relevant risks in an investment and therefore wants to see a bigger financial entity ultimately sitting behind the advise and taking responsibility. This is the reason SJP are very successful and why the IFA industry is still struggling to gain stand alone credibility despite the abolition of commission. It’s a steep mountain but that’s what creates the greatest opportunity.

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