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Skandia targets cost-cutting after £5m platform loss

Skandia 480

Skandia posted a £5.1m platform loss for the first half of the year and has revealed plans to slash costs by half in an attempt to move into profitability within the next three years.

In an investor presentation last week week, Skandia parent Old Mutual Wealth said it made a pre-tax profit of £95m for the first six months of the year. Funds under management held on the Skandia platform totalled £20.4bn.

The presentation showed the platform brought in revenue worth 52 basis points of funds under management, with platform expenses outweighing this at 57 basis points, resulting in a loss of 5 basis points as a proportion of funds under management.

A Skandia spokesman says these basis point figures represent an annualised rate in order to compare against future targets. On this basis, and based on funds under management of £20.4bn, the platform made a loss of £5.1m.

Skandia predicts its revenues will fall to between 40 and 45 basis points of funds under management over the next three years. It is targeting a reduction in platform costs of between 25 and 30 basis points.

Based on these estimates, Skandia is targeting platform profit of approximately 15 basis points of funds under management by 2015.

Concept Financial Planning managing director Paul Richardson says: “I think it is possible for Skandia to move into profit but it is going to take some time for it to reduce its outgoings to make that happen. There is a risk that service levels will drop as it looks to cut staff and costs.”

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