THE head of Standard Life has underlined the growth potential of the business that the firm’s previous owner decided to offload amid big changes in the financial services sector.
Phoenix Group acquired the Standard Life pensions operation and the famed brand from the Edinburgh-based group that has decided to focus on investment management under the abrdn name.
A year after taking charge of Standard Life, Andy Curran said the business had a key role to play in Phoenix’s plans to expand in the market for the provision of products for people who are saving for the future, such as pensions.
Phoenix made its name as a consolidator of closed pension books that were built up by firms that had stopped taking on new business.
However, Mr Curran said the £3.2 billion acquisition of the Standard Life pensions operation in 2018 made Phoenix a leading player among the groups that are trying to win new customers. The business is a key element of the group’s ‘Open’ division, which Mr Curran runs.
He expects the market it serves to grow significantly in coming years. The UK has an ageing population. Millions of workers have joined company schemes since the automatic enrolment requirement was introduced by the UK Government in 2012. In recent years, many companies have stopped offering defined benefit schemes that provide pensions based on final salaries. Lots favour defined contribution schemes, in which employees bear the related investment risk.
Mr Curran believes the Standard Life brand is a powerful tool that Phoenix Group can use to help it win more business, from companies that operate schemes and from individuals.
“The Standard Life brand has a fantastic heritage in the life and pensions industry,” said Mr Curran.
In addition to high levels of recognition among consumers, Mr Curran cited a “real warmness” to the brand among people who operate corporate schemes and their advisors. This includes consultants, independent financial advisers, trustees and the finance directors of companies.
Phoenix agreed in February to acquire the brand from the former Standard Life Aberdeen. This was formed by the merger of Standard Life and Aberdeen Asset Management in 2017.
While Standard Life Aberdeen decided there were better prospects in investment management, the group has suffered heavy outflows of funds since it was formed. It had retained the Standard Life brand following the original deal with Phoenix. The group adopted the abrdn brand recently.
Mr Curran is so confident about the prospects for Standard Life that he has sanctioned a recruitment drive that is set to result in employee numbers increasing in Edinburgh. The group employs around 2,800 in the city currently.
Mr Curran said the company would hire people with the expertise required to support its growth push amid the evolution of the long term savings market. People have much greater freedom now to decide when and how to access the funds they accumulate for retirement. Standard Life’s response will involve developing new propositions and ways of providing customer services along with associated marketing initiatives.
The group may use bolt-on acquisitions to grow the Standard Life business but will focus on organic growth.
However, Mr Curran underlined that Phoenix Group is ready to do more big deals to help grow its position in the bulk purchase annuities (BPA) market.
These would involve the group buying defined benefit schemes operated by companies in the expectation that it could cover the liabilities concerned for less than it paid.
Asked about the possibility of there being another referendum on Scottish independence within the next few years, Mr Curran said: “It would be premature to comment on what the implications may be at this stage.
“We are continuing to monitor developments closely and if it becomes clear that another referendum is to be held, we will assess the issues and implications for our customers, shareholders and employees, as we would with any other potential change in the political environment.”
Mr Curran said that between 10 per cent and 20% of the employees that are based usually in the main Standard Life building are working in the office currently, on average, with the remainder working from home. The company is following Government guidelines in respect of office working amid the pandemic. It has been thinking about the future of work since before the pandemic. The company expects to follow a hybrid model in future, with a mix of home and office-based working.
“We are trying to work with employees to get something that works well and is balanced,” said Mr Curran.
Mr Curran joined Phoenix in July last year after holding big jobs with Aviva, Prudential and Friends Life. He sits on the Phoenix Group board.
Around 2,700 Standard Life Aberdeen employees in the UK, on a full-time equivalent basis, transferred to Phoenix when it bought the pensions business in 2018. Phoenix has headquarters in London and a big operations centre in Birmingham.
Standard Life has 4.2m customers out of a Phoenix Group total of 13m.
abrdn has a 14% stake in Phoenix and manages around £147bn funds on its behalf, under a deal that is due to run until 2031.