Standard Life moves into advice with Pearson Jones deal

Standard Life has launched a nationwide advice arm and agreed a deal to buy Pearson Jones from Skipton Building Society for an undisclosed sum.  

Standard Life says the new business will aim to meet increased appetite for advice following the introduction of the Government’s pension freedom reforms with face-to-face, telephone and online services.

Pearson Jones has assets of £1.1bn and 39 advisers and paraplanners working in northern England. The deal is expected to complete before the end of June.

Standard Life says the business will grow through acquiring advice firms that “align well with our operating model” and through the creation of a new academy to train new advisers.

It will use Standard Life Investments, the group’s platform and support services through Threesixty.

Current advice, strategy and strategic investments managing director Steven Murray will chief executive of the new business.

Standard Life managing director Barry O’Dwyer says: “As a leading long-term savings business in the UK, this is an exciting next step for Standard Life. We already help millions of customers to save through the workplace and are a leading provider to the highest quality firms in the advice sector. Supporting advice has been a key part of our heritage since we were founded in 1825.

“We’re delighted Pearson Jones will be part of our new business. They have a single-minded focus on helping clients and are an excellent example of a progressive firm with an RDR-compliant, platform-based advisory proposition.  We look forward to working with the team to support the growth of our new business.”

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Comments

There are 14 comments at the moment, we would love to hear your opinion too.

  1. History repeating itself! Insurers buying advisers, what will make this one different I wonder!?

  2. One would hope that EVERY firm has an RDR compliant process over a year after they should have done!
    Glad we are not using Standard Life WRAP as this would be a signal to start placing business on a different WRAP for me (where appropriate of course)

  3. The big life companies have little option. They completely missed the boat on platforms and their investment bonds have been regulated out of existence. I suppose they will become a ‘vertically integrated’ firm and therefore able to offer ‘free’ advice like some others we know, and no-doubt and a suitably inflated cost.

  4. Soren

    Standard should be taken to court under the Trades Description Act – there’s no life in Standard. Even less now the are reverting to a Direct Sales model.

    IFAs should now seriously consider whether they should put any business with them at all.

    As I have said so often (boringly) in the past – these large firms have about as much clue about management and business as a stray cat. Their business model seems to be based on the Hokey Kokey. In – out – shake it all about!

  5. Different Point of View 6th February 2015 at 2:05 pm

    This move should be welcomed by all as Standard Life may help address the advice gap and If they can raise the general public’s confidence in advice and thus encourage more people to engage this should be welcome. They like all in this profession must learn from past mistakes, but we should not judge them on their mistakes but instead their actions.

    They also bring financial strength that many others who have attempted to generate National Advice firms have not had and this often resulted in poor practices as they chase profits to service their debt and investors requirements. Better to be backed by an Insurance company who has long-term commitment to the UK market than Private Equity firms who are looking for a quick profit.

  6. Well said Harry.

    How can they be committed to the IFA market and be a competitor at the same time ?

    Can they be trusted not to keep the two arms completely separate or will they target all those clients shown as dormant on the Wrap systems of IFAs? I wondered why we needed to input so much data on the Wrap to just obtain illustrations – maybe this is the reason?

    So much for Strategic business partners to WRAP supporting firms!

  7. Can’t say I am surprised, when they bought 360 I felt that moving back into this arena would be next. The problems will start when they start cold-calling IFA clients and saying they were orphans or they had to contact them for some feeble compliance reason – so I do agree with Harry that we should be careful before placing any more business with them.

    Although I am not in the slightest worried about them from a competitor viewpoint (they are far too expensive) I don’ think they are doing this to help fill the advice gap, but hopefully I am proved wrong.

  8. @ Different Point of View

    I do get so very weary when I hear sentiments like this. Are you an adviser or a social worker? Why it is our concern about the so called advice gap? Don’t you have sufficient clients?

    Anyway the gap (so called) is largely made up of those who don’t want to engage or who are patently unprofitable at any level.

    What will no doubt occur is the usual from direct sales. A foot in the door, the flogging of high priced low value dross whose consistency and retention rates will be abysmal. The adviser will have targets and be under the cosh to perform. After all Standard is a plc and shareholders will want to see a reasonable return. (Perfectly understandable).

    I would like to run a book on how long it will take for some sort of fine or sanction by the regulator for poor sales practice. (No doubt this, as ever, will be costed into the product).

    If you think the search for a return will be less of an imperative in a plc that a Private Equity firm I think you are deluded. As to engendering confidence I believe it will be exactly the opposite for the reasons outlined above. (Do you work for Standard??)

  9. Different Point of View 7th February 2015 at 6:58 am

    @ Harry

    You are very quick to judge, I am an adviser and I do not work or use Standard Life, as while I have looked at their proposition, as I do all providers, their offering it my opinion was not the best for my clients.

    I find it amazing that you have such a negative view on all larger companies, when it is many IFAs who have defaulted after selling UCIS and other unsuitable investments. I know of many IFAs who have targets for their staff and place pressure on them to sell more profitable but not necessary suitable products. It I was to take that sentiment that you run your business that way t you would be right to object to such a narrow minded view.

    One last argument for the larger company is that when they get it wrong, they can afford to pay compensation, while the smaller company will default and leave the rest of the profession to pick up the costs.

    Anyway I am happy that companies like Standard Life get involved and I have no fear about their competition as I believe that they will draw more people into getting advice, they will learn for the past mistakes and that is a good thing for the all.

  10. I’m not sure the idea of a platform provider offering advice needs to be as bad as the old model of a life assurance company having a DSF pushing old Life Company products. As long as the Platform terms can be configured to meet the needs of every segment that the advisers are likely to engage with…and the bias ends there i.e. the advisers select the actual investments from around the market.

    The disappointment here is two-fold. Firstly, its the same old same old able to enhance their position behind the cover of a regulatory regime that discriminates against smaller firms. The march of technology should be allowing small advice firms – and collectives of small advice firms – to launch their own custody and admin services (whether positioned as platforms or not). That sort of innovation will continue to drive down platform prices, open up competition and yes, capture value for the advice firms. The reason this is happening so slowly is not mere conservatism by the advisers, but regulatory barriers for those who want to do it: try asking FCA for CASS permissions if you do not already have them(!).

    The second point is ancillary. But if Standard Life was serious about its own quality advice arm, why did it pull the plug on 2Plan?

  11. @Different Point of View

    You are of course entitled to your different point of view. But the large companies pose a large systemic risk than smaller ones – as evidenced by the greater effort and focus on them by the regulator. Which is not to say by any means that they ignore the smaller advisers; but in their case not only do they pose a smaller overall risk, they know full well that they either pay the imposts with their own money or they are put out of business. This just doesn’t happen with the big boys.

    Your rose coloured view of the large players is not one I share or one that a good few others share either.

  12. @Harry – Snap

  13. I would agree whole-heartedly with Harry on this one. I’m sadly old enough to remember the days when all the big life companies had direct sales arms. I don’t recall it being a happy period for anyone.

    The trouble is that there is very little you can cut to give you the necessary economies of scale to make a large advice business work. I suspect that most small financial advisers make a pretty good living, charging enough to make business worthwhile for themselves, rent an office and employ a few staff. Standard will need to do all of this, PLUS employ sales managers, directors, expensive compliance departments AND make a return for shareholders. You cannot do that without charging significant fees, way beyond the value of the advice given. Especially if you have to target the lower end of the market.

    In the 1990’s the big players realised that their direct sales arms were far less profitable than acquiring business through IFA’s; even with the commission levels payable at the time. The only reason they are looking at this again is that IFA’s have virtually deserted the big insurers and are now dealing with platforms and smaller boutique fund managers, where they get the results and service that in turn allow them to deliver a high quality service to clients.

    I give Standard Life’s new venture between 3 and 5 years. I have no doubt that this will no longer be part of Standard by 2020.

  14. Whether it is a good or bad business idea, the life offices can afford to take the risk for bring the direct sales forces back into the market. It will mean that for a while anyway, that some of those who cannot afford full IFA advice (through no fault of the clients or advisers) will be able to get hold of good advice given by qualified advisers. It is different now to the 80s and 90s and even then at least people bought policies. The pru, Pearl etc were all fantastic at this and albeit a lot of small stuff was bought but having some life cover or savings plans was better than having none IMHO. Under the new sales force, the end product may not be the best in the market, it may not be the least expensive in the market but the days of high charging products are long gone so the products may well be reasonable (or better than reasonable). Price is not everything as we all know (as many regular bloggers attest to) and if they can offer reasonable products, reasonably priced then good luck to them. There will be a market for them.

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