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The bigger picture

Head of pensions Steve Latto on the benefits of being part of a bigger company and its plans to link up with advisers.

This balance between scale and functionality has helped Alliance Trust Savings grow since its formation in 1986.

Latto says: “It was set up as a dividend reinvestment vehicle for Alliance Trust plc shareholders. Then when personal equity plans came along in 1987, we started offering those followed by dealing accounts, Sipps and Isas.

“Today, we have the same three core areas as we did then but we offer a wider investment choice. We have investment trusts, Aim-listed securities and 21,000 overseas securities from 18 countries.”

Its key products now are the Select Sipp and the Full Sipp. “The Select Sipp launched in 1997 and is limited to quoted securities like the Isa and the dealing account. Ninety per cent of purchases on that product are placed online, so it is simple to administer,” says Latto.

The Select Sipp operates at the lowercost end of the market. Latto says: “Our principles are probably different from our competitors in that we do not have any percentage-based charges and we do not retain rebates for any commission payments.

“If we do receive any payment from a fund manager, we rebate that back into the client’s fund. One of the reasons people like us is that we are transparent and cost-effective.”

The Full Sipp offers a much wider range of investments, such as commercial property and unquoted shares, and is more challenging to administer. Alliance Trust Savings launched this Sipp in 2005 when it acquired Wolanski & Co Trustees but closed it in 2008.

Latto says: “The wide range of investment choice available within the Full Sipp meant there were a lot of manual processes that needed to be carried out behind it. Between the purchase of that book in 2005 and the end of 2008, we almost trebled the number of Full Sipps we administered. It just was not possible to train staff at the rate we required.

“We decided to close the Full Sipp to protect customer service levels. We initiated a project that looked at every single Sipp and, where possible, automated them.”

Alliance Trust Savings also enhanced its back office, created a new investment system for commercial property and built a system that logged all customer interaction. The company relaunched the Full Sipp in 2009.

The other major milestone in Alliance Trust Savings’ history was the launch of its i.nvest platform in 2010. Latto says: “We already had a platform but we relaunched it in 2010 because we had added a significant number of funds. We felt it was a credible platform with the full investment choice advisers and clients wanted.”

Recently, the company has been using the i.nvest platform to widen its appeal to advisers. Its aim is to boost the volume of IFA business from 10 per cent of total sales to 50 per cent and Latto says it is going well.

“We have got four individuals who promote the platform to advisers and we are getting there. We have introduced core features such as adviser charging functionality and illustrations. Also, with the RDR coming down the pipe, advisers are being forced to consider the platform they select as part of the advice process more carefully.”

Latto also believes Alliance Trust Savings’ charging structure stands it in good stead for the RDR. “We can service a range of clients. For those with more than £50,000, they could look at a competitor, see them charging 25 basis points and realise that equates to an extra £125. But our structure does not exclude people with smaller pots because they can vet the level of transaction charges to one they are comfortable with,” he says.

Latto does not think Alliance Trust Savings will have to tweak its business modeltoo much after 2012. “We are in quite a good place compared with a lot of platforms. Rebates are not a revenue source we rely on for business purposes, so even if the FSA bans them, it will not really affect us.”

Concerns around whether or not Alliance Trust Savings will still have a point of difference from other platforms if rebates are banned are unfounded, says Latto. “Our charging structure will still be different from our competitors – they may choose to charge a percentage-based AMC.”

International equities have also been playing a role in Alliance Trust Savings’ push to attract more IFAs. It introduced an international equities proposition in 2011 and Latto says there has been a lot of interest in it. He says: “It is an appealing concept because it features companies people recognise such as Google or Volkswagen, which do not necessarily have shares traded in London. Markets have been fairly volatile but we do expect demand to pick up once things stabilise. There is demand from individuals and advisers who have a degree of confidence and want exposure to something a bit wider.”

However, Alliance Trust Savings does not plan to go overboard on adding functionality for advisers. Latto says: “We do not want to end up with lots of enhancements that only a few advisers can use but everyone ends up paying for. If we build something, either we will get the benefit and increase the business or the developments will have to be paid for through increasing charges. We do not believe in destroying our model to add lots of functionality.”

What Alliance Trust Savings will be focusing on is getting its message out to IFAs. “We will not be doing anything radical this year, it is about increasing awareness of what we do within the adviser market,” says Latto.

He believes the company’s unique place in the market will help it achieve its goal. “Word of mouth is one of the main ways that people learn about us. Yes, you need advertising but a satisfied customer is one of the best things you can have.”

Company history

1986: Alliance Trust Savings founded as a dividend reinvestment vehicle for Alliance Trust shareholders
1987: Alliance Trust Savings launches Pep offering
1997: Launches Select Sipp
1999: Starts offering Isas
2005: Acquires Wolanski & Co Trustees and launches Full Sipp
2008: Closes Full Sipp after administrative issues
2009: Relaunches Full Sipp
2010: Launches i.nvest platform in order to broaden presence in advised market
2011: Introduces international equities proposition on i.nvest to further capture adviser market

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