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Standard says face-to-face advice not needed for mid-market

IFAs will be able to service mid-market clients profitably after the RDR if they develop web and phone-based arrangements, according to Standard Life’s new head of UK platform distribution Chris Divito.

Divito, who took over the role from Steven Sands in May, says there is no need to provide a face-to-face service when assessing risk profiles or collecting client information.

He says: “I totally disagree that IFAs cannot service their mid-market clients. I think it is possible for advisers to conduct a wealth management service without the need to carry out a face-to-face quote or risk assessment.

“It is possible to do a fact-find over the phone and a risk assessment via the web. The IFA just needs to work out how much time needs to be devoted to each client.”

Divito says his main focus currently is on increasing the level of assets on the Standard Life platform. He aims to increase assets by £1bn per quarter throughout 2011.

According to The Platforum, Standard Life increased its platform assets by £1.35bn in the first quarter this year, bringing the total to around £7.5bn.

Standard Life has not yet ventured into the corporate wrap market but Divito admits the firm has not ruled out launching its own proposition.

He says: “I think corporate wraps will have a place in the market. The people who cannot afford advice would be able to go down the route of taking investment services from their employer’s corporate wrap, where they can get access to the company’s Isa or shares. It is something we need to be aware of.”

Divito says Standard Life’s wrap is in talks over links with distribution firms and he believes there is still a lot of business to be done in this area but he adds that Standard would be reluctant to get into any deals where it is the exclusive platform provider.

Divito says: “We are working on a number of different deals at the moment with regional and national players but exclusivity is really difficult to do because IFAs want to have different propositions for different parts of their client base.

“It is not something we would be keen on because it puts a great deal of responsibility on both parties.”

With regard to the direct-to-consumer market, Divito vows that Standard Life will remain committed to the IFA market.

He says: “Right now the vast amount of new business comes via IFAs. Everything we are talking about internally is with IFA custom at the heart of it. We are looking to deliver the service they want.”

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Comments

There are 29 comments at the moment, we would love to hear your opinion too.

  1. here speaks a man who has probably never done face to face client visits and has no idea what he is talking about!

  2. Agree with you Nick. Standard are trying to lead their clients (ie; those orphan clients that haven’t been serviced for years) down a road that will protect them.
    Risk profiling is an important function and face to face meetings, know your client are so so important. You cannot gauge clients reactions, facial expressions over the phone or via the web.
    Having said that Hargreaves to a pretty good job on the business front, but are they truly in touch with their clients?

  3. There are no quick, easy solutions, when you have lifetime liability and can be sued to the tune of £150000, without recourse to the law.

  4. Hi Nick

    Would totally agree with you !!

  5. Nick, Mr G, funnily enough both Chris Divito and his predecessor Steve Sands started off in SL’s direct sales area a good few years ago so I think you’ll find they’ve seen plenty of clients face to face. Not to say they are right but his views won’t just be based on theory.

  6. This takes away the whole concept of Independant Financial Advice. Much is learnt about a client when you are in front of them .eg. body language, facial expressions which indicate peoples attitudes to many things, not just attitude to risk, which may influence your advice..

  7. What a load of rubbish!

    I agree – I bet that Divito had never advised clients on a face to face basis before. I am a sole trader and none of my clients would be happy to take part in a web based risk assessment. A large number of my clients also do not have access to the internet. These are the clients that need the face to face service!

  8. Typical Standard, Flipant comments easy made when you don’t have the work on the fromt line!

    Generally clients who don’t want advice or are not willing to pay for it use internet based models. Most who feel that they get a better service when it’s cheap return when they realise that they pay HL the same amount for no on going service!

    We’re not just dealing with numbers here and money is extremely emotive. No matter how hard you try it’s impossible to remove that.

  9. Having failed with their direct sales force and attempts at fostering Tied Agency sales forces – meet the latest get-rich-quick scheme from the “IFA’s friend” Standard Life – Telesales. Brilliant! wonder why no one’s tried it before?

  10. Standard Lamp gets switched off 11th July 2011 at 10:10 am

    I’m not sure Standard Life has a very good history of supporting the middle market and I certainly did not hear them shouting very loudly in support of the IFA and against RDR. Still Standard Life does have a history of getting it wrong and I reckon they now see tied restricted advice as their future!

    In 2000, the mutual said it would guarantee its endowment policies but then due to what the firm described as a “cruel investment climate”, policies maturing from 2006 were not covered leaving up to 600,000 “middle market” investors affected by the insurer’s move.

    Remember how Standard Life sold £7.5bn of shares to satisfy the Financial Services Authority’s solvency requirements for life insurers. Then the market recovered and left their clients tied in at the bottom.

    Perhaps Standard will get this one just as wrong?

  11. If an advisors role is to give advice based on an intimate understanding of the customer and their financial circumstances, how can this possible be done without a personal interaction that questions and challenges fact in order to get to the real needs and requirements?
    Is this an attempt for the Life Office to abdicate their responsibility to maintain the service to orphan clients or those who cannot afford advise?
    What will the role of the Life Office actually be post RDR?

  12. Utter tripe.

  13. I really think the comments posted stating this guy has no experience of face to face epitomises the problem with this industry. Just think for a moment how your buying patterns have changed. Did you think you would bank on line for example. Come on be more receptive to change and you might find you get somewhere.

  14. Really hasn’t got a scoobie… typical Standard Life arrogance…

    ….with this litigious society, I like to see clients face to face..

    …..love the word ‘deals’ really sums it all up… 🙁

    ….I thought we had moved on….

  15. These comments are neitehr right nor wrong. It depends on where your clients are geographically compared to you and how mobile they are too.
    Travelling time for an adviser can be wasted time, but if the client is within 15 minutes to half an hours travelling time of you, then I tend to think the default and preferred option should be face to face as you DO miss important signals (facial expressions) including lack of understanding and uncertainty which ca be resolved if seen. We’ve had webcams on our PCs for nearly 7 years and I have only once used a webcam with a client as it is just NOT the same.
    We work on the principle that to know a client you need to see where they live oir work at least once. There are LOTS of otehr warning signs you can see by looking at their home or their workplace. Once you have seen them once, if the client lives more than an hour away from us, we try and work a rotating system of us going to them, then them coming to us, then phone calls and then back to visits out again, with no set pattern.
    As with most things common sense applies, but face to face reduces risk of losing a client to a competitor (and client aquisition can be expensive) as well as reducing risks of a problem for a client becoming a complaint.

  16. Another Pissed Off IFA 11th July 2011 at 12:21 pm

    As @Nick says, this is all nonsense. If people wanted an on-line solution, would they not be seeking that out in droves?

    The heart of the problem with this is that its a result of government sticking its very grubby and ill-fitting finger into business. The FSA has decreed how business should be done and now business is trying to make it work. No wonder Standard Life and others are talking nonsense.

    The same thing happened with stakeholder pensions. The insurance companies were fawning over themselves to show how ‘compliant’ they were. what happened next?

    N.O.T.H.I.N.G. (except P45’s being handed out).

    Product could not be shifted because government had decreed that a ‘good’ pension had to be distributed below cost. It was socialist bull.

    RDR is stakeholder II

    Government cannot run business. That is why the bods in government are in government – to wait for their pensions.

  17. Chris Divito
    Head of UK Platform Distribution, Standard Life

    Chris Divito’s Overview
    Current •Head of UK Platform Distribution at Standard Life
    Past •Head of Major Distribution/Head of Distribution (North) at Standard Life
    •Regional Manager (Investment) at Standard Life
    •Account Manager at Standard Life
    •Financial Services Manager at Halifax PLC

  18. Greg Jenkins (Edinburgh) 11th July 2011 at 1:12 pm

    Surely the ATR form we all use now is only a guide to a client’s actual attitude to risk? Advisers take time to go into detail about what the ATR actually means. Many of my clients have filled out a form which suggests they are one risk banding, which after discussion changes. How can this happen online?

    Also, how can an online system help a client understand risk in relation to a particluar need? A client can obviously have a different ATR for medium term investments as opposed to retirement planning.

    On the plus side, I will continue to take Standard Life’s business and enjoy doing so as they obviously have contempt for the IFA community.

  19. Voice of youth??? 11th July 2011 at 1:55 pm

    At the risk of upsetting many interesting and knowledgable contributors, IFAs just don’t get “IT”. Whilst most people today may well prefer F2F, the younger generations (X, Y, millennial’s in marketing jargon) would laugh in your face if you proposed that you sit in front of them for several hours, collected their details with a pen and paper (soooo 20th century), went away for a few days, came back again for several more hours, asked them to sign some papers and then be told they will hopefully have their investments completed in a few more days… these are the post baby boomer clients that will just not be serviced by IFAs in the future.

    5 years from now when Google/Facebook/Twitter/Other Internet Giant Financial Advice Services has launched everyone will use these trusted internet super brands far more than the “dodgy old sales guy” who visited their parents once a year. It will become increasingly difficult for IFAs to show the benefit they can undoubtedly bring if you can do it for free online without having to sit through a tea and biscuit fuelled marathon meeting about something they frankly don’t want to waste their time on.

    Of course there will always be a place for F2F advice (as many here say it is still the best method of communication) but things move on and client demands evolve. The clients of the future will not put up with the current level of archaic service and demand results instantly leaving IFAs at risk being left behind with their quills and ink wells.

  20. Thank you Voice of Youth, I would love to learn from your (in)experience, but there are a couple of inconvenient details that you appear to have overlooked.
    1 this is not driven by the desire of clients/potential clients to avoid face-to-face meetings, but by the commercial interests of Standard Life who (finally realising) that they cannot operate a successful direct sales operation on a face-to-face basis now seeks to persuade the industry that face-to-face is not necessary
    2 our regulator requires us to “know our client” – surely a lot more difficult if we have never met them

    To the many who will (apparently) “laugh in my face” at my completely unreasonable demand to obtain information about them before I advise them, well that’s just my hard luck isn’t it

  21. “dodgy old sales guy”
    from the bank you mean?
    The younger generation are welcome to use the “trusted” internet superbrands but when they wake up on A day with no pension funds to speak of or the wrong mortgage who will they blame but themselves. After all it will be they who have filled in an online form they did not fully understand in the first place. Never mind at least the regulator will be able to claim a decrease in miss selling. Good luck to them, they will need it.

  22. stanley holmes 11th July 2011 at 5:59 pm

    The only person who knows how to service their clients is the IFA who knows their requirements and how to handle same

    A pity this Industry does not recognise that and a lot of faceless individuals attempt to set the goalposts and standards which in the main do not meet clients needs what about TCF is that now forgotten?

  23. Pontification by some egg-head in a head office too remote from the coal face to make any sense!

  24. I think what Mr. Divito is trying to explore, but not really achieving it, is a particular way of dealing with a certain market segment to ensure it is cost efficient for the IFA.

    Ultimately, if you are an IFA dealing with the middle-lower end of the market post RDR, you are potentially in trouble. If you advise the upper end of the market (which I guess most people on here do), all will be fine, you will see. Nobody likes change, but this is good change for sure. Your relationships with accountants and solicitors will be enhanced immeasurably and lead to greater business opportunities.

  25. I think the point is being missed here.

    What Standard Life is proposing isn’t advice – the public may as well use comparethemeerkat.

    To give ‘full advice’ you have to know your client which cannot be done over the phone or internet unless is ‘restricted’ advice.

  26. The Voice of Youth 13th July 2011 at 9:24 am

    @ipd I think you have it spot on with your first line.

    I strongly disagree that advice has to always be F2F. Whilst it is certainly the best medium it is also the most expensive and a whole section of society is left without access to advice, how is that a good outcome???

    IFAs need to realise that whilst the top end will still get their F2F time the other segments of the market deserve good advice as well, just delivered in a different way.

    As for KYC, why does everyone insist it has to be face to face? There is nothing in the regulations that says this and it is more than possible to do this by means other than F2F.

  27. Chris Divito has a point in that advisers do not need to spend time in front of their clients. One of our advisers spends around 5% of her time in front of clients – the rest of the time is doing exactly what Chris Divito suggests. The initial meeting can be 4 hours long though! (3 hours longer than a bank!)
    What you cannot do online is get a feel for and understanding of the client. And as for the Risk Profile – that requires much better handling than simply filling in a questionnaire.
    But once the client is on-board, Chris Divito is right. Advisers have to be smarter and work more efficiently.

  28. Sam – I agree, that was what I was trying to say. My average first meeting is OVER 2 hours as it is all about getting to KNOW your client. Once you have done so, the updating can be by phone, email etc, with F2F periodically to maintain the relationship. If the client will cme to us, it can always be f2f as there is no difference to us between phone and face to face then.
    If the client is HNW and they say, please always come to us, or the have a disability (we have several clients who do have), then particulalry with the latter, we will always go to them and we ignore travelling time and costs for the disabled within an hours travelling time, any further and it would make more sense for them and us to have a more local adviser.
    Work smarter, not harder…..

  29. Chris Divito is not quite on the right lines in his thoughts around web-based solutions. I work with providers to review legacy investment complaints and have yet to see a perfect stand alone risk profiling tool. There are too many other factors to capture and discuss with clients – future plans (that clients cannot always clearly articulate and may need a steer on eg potential long tem care arrangements), reflection time, vulnerability, current and future liquidity and level of understanding to name but a few. These softer considerations apply to new business as well as ongoing sales/servicing and is quite simply too complex to take the adviser out of the equation.

    In fairness to Chris, technology moves forward and my comments may prove redundant depending on plans that Standard may have. I suspect they’re not quite there yet though.

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