Standard Life [SLA] has had a shaky start to 2019. Investment outflows, a legal spat with Lloyds and a change in management structure have all taken a toll on investor confidence. This has continued with a shareholder revolt at its AGM over CFO pay. But in a move to focus the company’s strategy, Standard Life have pinned hopes on their platform business.
Standard Life are hoping that the shift will restore investor confidence. Since the start of the year, the share price is up 2.7% but has had a rocky time of it. Back in March the stock touched a low of 231.05 as outflows of £5 billion knocked confidence.
Shareholders had also grown exasperated over the company’s dual CEO structure, with some believing it delivered a fractured vision for where to take the business. SLA have at least managed to resolve this point, with Martin Gilbert stepping aside so Keith Skeoch could take the reins as sole CEO.SLA 1-year share price performance, CMC Markets, 15 May 2019
How is SLA developing its platform business?
SLA is upgrading its Wrap, Elevate and Parmenion platforms to take advantage of changes to pension legislation.
In May last year, SLA announced new features for both the Wrap and Elevate platforms. Wrap will get new advisor portfolio capabilities and planning tools. Meanwhile, Elevate users will have access to more fund managers and the ability to mix and match investment approaches.
At the time, David Tiller, Head of Adviser and Wealth Manager Propositions at Standard Life, said:
"The development plans we are announcing today (9 May 2018) build on solid foundations to take a major leap forward in the support that Wrap and Elevate will be able to provide advisers."
SLA will also target legacy users of the Parmenion platform with a new My Investments feature. And its 1825 advisor service will get a digital makeover to provide easier access.
“The development plans we are announcing today (9 May 2018) build on solid foundations to take a major leap forward in the support that Wrap and Elevate will be able to provide advisers.” - David Tiller, Head of Adviser and Wealth Manager Propositions
Why should investors care?
In essence, SLA is building an ecosystem of complementary platforms. This means it can tap into its vast customer base, no matter how they wish to interact with SLA:
"We have access to 16 million customers, around 30% of UK savers – and these customers will now have access to a broad range of offerings throughout the ecosystem from non-advice, digital advice to traditional face-to-face advice, either through 1825 or through the 5,000 IFA firms powered by our platform,” Skeoch told analysts in March.
The shift in priorities comes after SLA offloaded its insurance arm to Phoenix. With £550 billion under management, SLA has the heft to make a serious investment in its platforms. Traders will now be looking to see if they can pull it off. A botched platform upgrade at rival Aviva saw its share price sink. But if SLA can get things right, it could see long-term price gains as a result.
|PE ratio (TTM)||9.07|
|Quarterly earnings growth (YoY)||55.90%|
SLA share price vitals, Yahoo finance, 15 May 2019
Who's interested in SLA's platforms?
Virgin Money for one. The Virgin offshoot has entered into a joint venture with SLA, which will see the latter manage £3.7 billion worth of assets. The deal includes SLA developing a separate non-advised platform for Virgin Money customers.
The tie-up is part of a wider strategic move, which saw SLA buy 50% of Glasgow-based lender CYBG for £40 million. CYBG operate Clysedale Bank, Yorkshire Bank and Virgin Money, and have a vast pool of savers that SLA can sell its products to.
Morningstar have also teamed up with Standard Life to offer risk-profiled ESG portfolios through the Wrap platform. The collaboration will give portfolio managers access to ETFs and traditional open-ended funds.
What happened at SLA’s AGM?
The Virgin Money assets contributed to a 3% first quarter rise in assets under management. Announced before yesterday's annual general meeting, this now sees SLA manage £569 billion worth of assets.
First quarter rise in AUM
Despite the good news, more than 42% of shareholders voted against the company’s pay report at the meeting. Reasons for concern centred around SLA’s new Chief Financial Officer’s package. A hot topic giving those further down the pecking order have had bonuses cut.
When Stephanie Bruce joins as CFO in June, she will be on a £525,000 salary, well above her predecessors £450,000. Bruce will also be eligible for a performance-dependant shares award worth up to 350% of her salary. To justify the hefty executive pay, shareholders will want to see SLA's platform business jump start the share price.