Standard Life defends conflicts as advice arm’s in-house platform use revealed

Standard Life 480Standard Life Aberdeen has defended its model as new figures show financial planners at advice arm 1825 put half of their assets on to the group’s in-house platform.

SLA says it is expert at managing the conflicts of interests that come with working across the value chain, including the £1.9bn of assets from its advice subsidiary that are held on Standard Life Wrap.

SLA-owned 1825 has a total of £4bn assets under advice according to financial statements from 2018.

Speaking to Money Marketing, SLA chief executive of pensions and savings Barry O’Dwyer says the company has safeguards and policies to manage conflicts that come with having an asset management, investment platform and advice business.

“We think we are pretty expert at managing those conflicts of interest now because we have the 1825 business, the platform and the asset manager within the same stable and we are very conscious of our responsibilities to each set of clients in each of those businesses.

“We have the appropriate safeguards in place to make sure we do not share data across these companies but this is nothing new for us- we have been doing it for years. It is just part and parcel of running a business that operates across the value chain.”

O’Dwyer says SLA’s advice arm 1825 is an important client to Standard Life Wrap, however: “It has about £1.9bn on the Standard Life Wrap. It is a big advice firm on the wrap but I would not put the success of the platform down to 1825.

“Although 1825 is important it is probably important for other reasons rather than its contribution to the platform.”

According to financial statements for last year 1825 acquired two businesses in 2018 and assets under advice increased by £400m to £4bn.

Between two of SLA’s platform, Standard Life Wrap and Elevate, there are £54.2bn assets under management.

As well as the crossover from the advice to the platform arms of the business, SLA has been open about the percentage of Standard Life Investments assets in the 1825 portfolios.

O’Dwyer states there is a cap on what proportion of client assets any 1825 adviser can put with in house funds.

“1825 has a policy where no asset manager can manage more than 35 per cent of the 1825 portfolios. There is an automatic cap on the use of any assets manager, including Aberdeen Standard Investments.”

No cross-subsidisation

O’Dwyer says Standard Life Aberdeen views 1825 as profit-making because it runs at a small profit until you factor in central cost allocations, at which point it runs at a small loss.

He says the success of 1825 is thanks to clients sticking with the brand once IFAs are acquired.

He says: “We see it as a profit-making business and we do not cross subsidise it with any other part of SLA. We do not need to because the way we have built that business is by taking on high quality, valuable firms that have loyal client books and by and large those clients stick with us when we buy firms and rebrand to 1825. The model works so there is no need to cross-subsidise.”

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Annoyed Bristol 19th March 2019 at 9:17 pm

    Could 1825 say how much of the new business goes on to the wrap and the funds they say are elsewhere if they are legacy business from the aquisitions. If this is the case what percentage of those clients at review are moved across to wrap as that would show if any conflicts exist

  2. Are the £1.9bn assets that 1825 has sitting on the SL Wrap platform not mainly attributed to the assets of Standard Life Client Management (in-house dist channel) moving under the 1825 banner? When SLCM wrote business, funnily enough it went on SL’s platform.

    • Annoyed Bristol 23rd March 2019 at 11:06 am

      The companies they bought were companies I understand who held a fair amount on wrap. I imagine the assets not held will be the legacy business. The question needs to be asked what percentage of new business is placed on wrap. 1825 are essentially as far as I can tell there to push staberdeens products and stating no fund conflict the fact that GARs and its sister fund which everyone else seems to be bailing from account for between circa 8 to 10% of those funds show the conflict and poses the question is for corporate interests as many would not see it as being in the clients interests

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