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Ian McKenna: Where the Standard Life/Phoenix deal could fall down for advisers

Phoenix needs to demonstrate how it will shed its bad reputation from a technology perspective

The recently announced terms of the sale of Standard Life Aberdeen’s insurance arm to Phoenix provides insight into the future of huge amounts of business written by advisers over the past 30 years.

In its previous form, Standard Life was a stalwart of the adviser market. Parts of the business may still be but what of that it is passing over? Those who placed products with it still have ongoing client relationships to serve.

The changes do not affect assets on the Standard Life Wrap, Elevate or Parmenion platforms. Logically, Standard Life Aberdeen will move to consolidate these three platforms at some stage. Why would you want to run three different sets of technology, and the related expenses, in the long term?

That said, plans are unlikely to become clear until around the third anniversary of the Elevate acquisition next year. This will bring with it a whole fresh set of challenges and opportunities, but that is a subject to explore another time.

For now we must consider the implications for those with assets moving to Phoenix.

From a technology perspective, Standard Life always led the pack when it came to adviser services. Phoenix has been the complete opposite, however. Ask advisers who the worst companies are to get information from about a client and more often than not Equitable Life, Windsor Life and Phoenix will be at the top of the list.

Some parts of Standard Life Aberdeen are continuing to make huge strides in the technology they have to offer. The Focus Solutions software business in particular has done a great job with its Now: range. This is a must-consider option for any advice firm reviewing their practice management system, provided they can meet the Focus minimum number of users.

The cut-down version of the cashflow planning tool currently being offered for free to Standard Life Wrap customers is also well worth investigating.

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In contrast, Standard Life’s workplace pensions team has not liked being asked how they have been working to keep up in a very competitive sector. This part of the business is going to face considerable challenges retaining the huge amount of auto-enrolment assets it has attracted over the past six years.

Even before the transfer of ownership I heard a number of workplace advice firms complain it was trying to retain schemes at rates that were no longer competitive with such significant assets invested.

Previously, Standard Life could rely on its brand and reputation to retain such investments, but now that the assets will sit with a company that has never been known for making services available digitally there may be a compelling case for moving to a new provider.

The likes of Aegon, Aviva and Scottish Widows must be rubbing their hands with glee at the prospect of taking chunks out of Standard Life’s workplace book.

Rivals will be rubbing their hands with glee ready to take chunks out of Standard Life’s workplace book

It might be that Phoenix will do as its name suggests and rise again as a mainstream life and pensions player. This is not unprecedented: when it acquired the Axa over-50s book it was kept open and rebranded as Sun Life. It is still writing new business.

Even if it does not plan to follow such a course Phoenix needs to move quickly to provide advisers with comfort over its future direction. Based on its historic track record there are reservations about its ongoing ability to service the clients involved efficiently.

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Are advisers to expect the level of service – or, rather, lack of it – they have become used to from closed book providers, Phoenix included?

It needs to demonstrate that it will be as easy for advisers to deal with digitally as other life offices and platforms.

I am currently seeing an unparalleled level of executives at large advice firms putting technology at the heart of their strategy. Phoenix needs to understand what these firms’ priorities and objectives are and put in place the right technology to meet their rapidly evolving needs.

The evidence presented at Intelliflo’s “Change the Game” conference in Manchester last week showed there is a very strong relationship between use of digital services and adviser profitability.

Phoenix must make sure it can deliver on this. Without such action it will be reasonable for firms to review whether clients’ assets would be better invested with organisations that have made the necessary digital investment.

Ian McKenna is director at Finance & Technology Research Centre

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