Standard Life has launched an initiative targeting high net worth
individuals in the UK, offering what it claims will be superior
institutional-class funds, although rivals claim it is an expensive
scheme.
A new unit, Standard Life Wealth, will target individuals,
charities and executive pension schemes with at least £2 million
($3.9 million) in investable assets, £1 million of which must be
liquid. It will tailor individual portfolios using ‘goals-based
absolute return strategies’ which the firm says will provide a more
accurate analysis of client requirements.
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The venture will impose a fee of 1.375 percent of assets under
management, described by rival private banks as “expensive”,
particularly given that Standard Life will have to break into a new
wealth sector at a time of the worst financial market volatility in
years.
However, it is understood that this reflects the need for Standard
Life to reward intermediaries, such as independent financial
advisers (IFAs), for securing clients for its new service.
Currently, 85 percent of Standard Life’s group business comes from
intermediaries such as IFAs.
The discretionary offering aims to tap into a hitherto-flourishing
personal wealth market that Standard Life believes has been fuelled
by successful entrepreneurship. The tradition of inherited wealth
is being supplanted by increasingly successful businesspeople,
though both sectors have demonstrated an ability to make gains on
their existing wealth, it says.
While the dominance of inherited asset bases may be fading, the UK
insurer and asset manager believes that the high concentration of
liquid assets among such a small segment of the population means it
is these same businesspeople who must now confront the issue of
passing on their wealth to the next generation.
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By GlobalDataOther groups targeted by the initiative include private families,
senior executives and highly successful professionals, as well as
prominent figures from the media and sporting worlds.
The company cites figures showing the top 0.5 percent of the
wealthiest individuals in the UK control almost half the county’s
investable wealth, along with the fact that 80 percent of this
group are over the age of 55, as evidence that demand for the
effective management of this wealth is already in place. It
estimates that there are now 470,000 adults living in UK households
with an average wealth of £2.3 million. It expects the size of this
group to rise by 7 percent a year until 2010.
“Our investment expertise, client-focused approach and competitive
fee structure will make us an important player in the discretionary
investment management market,” Standard Life Wealth chief executive
Richard Charnock said in a statement. Charnock was previously the
chief executive of asset management firm Williams de Broe before
moving to Standard Life Investments last year.
Though launched as a stand-alone subsidiary, Standard Life Wealth
will work closely with Standard Life Investments, which had £142.2
billion in assets under management as of last September, as well as
the group’s wider financial services division.
The launch of the business follows the recent announcement of other
wealth management expansion plans within the UK market, suggesting
that both major and minor players still see opportunities for
growth despite the current uncertainty within the investment
markets. Another Edinburgh-based group, Bank of Scotland
International, is stepping up its wealth efforts with the launch of
an offshore private banking service. Last month Santander said that
it was to create a holding company for its James Hay, Abbey
Stockbrokers and Carter Allen Private Bank brands under the name of
Santander Private Banking UK, while Barclays Wealth announced in
December that it was to hire 250 staff for its UK operations.
Bespoke packages
The new Bank of Scotland service will offer completely bespoke
offshore packages for individuals wanting to make the most of their
tax status with financial advice and solutions built to suit each
client’s circumstances. Its combination of services offers access
to, and information on, a wide range of offshore banking, savings,
mortgages and treasury services, all across a variety of
currencies.
Specialist services, such as tax and trust advice, are also on
offer through Bank of Scotland International’s external providers.
This includes the Rossborough Group for financial planning needs
and Collins Stewart Wealth Management for independent investments
services and stock broking. Trust and tax planning services are
also available.
James Gairdner, managing director at Bank of Scotland
International, said: “Our new international private banking service
offers a personal solution for individuals which will cater to all
their offshore financial needs. The depth of personal attention and
range of products on offer ensures that all our customers receive a
high level of service, helping them manage their money much more
easily.”
Friends say goodbye
Another UK insurer, Friends Provident, is effectively exiting
high-end wealth management with a sweeping corporate restructuring.
The company, which failed to complete a £4.4 billion merger
agreement last year with fellow insurer Resolution, is positioning
to sell three units in a move to restore declining profit and
reduce the need to raise cash. These involve stakes in F&C
Asset Management, Lombard International and Pantheon
Financial.
After the failure of the Resolution deal, Friends Provident
abandoned plans in August to raise about £500 million to finance
growth and hired Goldman Sachs as a corporate adviser in
December.
The insurer owns 52 percent of F&C, named after the
long-standing Foreign & Colonial fund. The company managed £105
billion of assets at the end of 2007 and has a market value of £934
million, valuing the Friends’s stake at about £485 million.
Its Lombard International unit was positioned to expand Friends
international operations and increase revenue from wealthy clients
in Europe. Lombard, which provides estate and tax planning
services, may be worth as much as £920 million, Deutsche Bank
analysts estimate. Pantheon is a financial advisory firm.
The sale of these stakes will leave a shrunken Friends Provident
with its UK life insurance and pensions operation and an
international division, and so able to finance expansion “without
recourse to debt or equity markets,” the company said.
