Have you ever noticed how humans are attracted to round numbers? We ooh and ahh when a platform business goes through 10, 20, 50, 100bn of assets under administration. But we are unmoved at nine, 19, 49 and 99bn. This is just one of the reasons why we can’t be trusted.
All that said, this is my 50th column for the august organ that is Money Management, and I think we can all agree that this is a highly meaningful milestone. I haven’t had my gold watch from the editor yet, but I assume it’s in the post.
It’s tempting, at a point which is marked by round numbers, to do a retrospective of the past 50 columns, but on the off chance that you read them you’ve already suffered once and it seems cruel to put you through it again. Plus it would be a criminal waste as we have so much going on to talk about.
Standard Life
First of all, I can’t let the proposed sale of the Standard Life (SL) insured book to Phoenix go by without comment. The 200-year-old behemoth has just been killed by the entity it brought into the world in 1998. Bloody millennials, eh? You feed and clothe them, and the minute they turn 20 they stick a spear into your side and sack you off to a zombie insurer.
On a related note, The Fisher King is a good tale. (Look it up!)
I worked for SL for a little while; something I think neither of us enjoyed that much. But I am an Edinburgh boy and this is arguably the last of the great Edinburgh institutions to go the way of all flesh. And that’s what’s happening, no matter how many corporate videos poor Barry O’Dwyer gets forced to do. It’s a sad moment. Edinburgh, as many of you will know, is a village, and this kind of thing has repercussions well beyond the stuff that gets reported.
There are a lot of very emotional people knocking around the New Town at the moment. The internal language of staff being ‘retained’ or ‘disposed’ doesn’t help.
Phoenix may well do a decent job of administration, but companies always revert to what they know – what’s in their DNA. What Phoenix knows is radical cost reduction, service commoditisation and asset-stripping. The idea that SL will have a saleable workplace and retail proposition that has yellow and blue out front and Phoenix in the back is, as the weeks go by, getting harder and harder to swallow.
But perhaps it doesn’t matter. We’re all hard capitalists here. Back books are for losers, and it’s all about the new stuff. Staberdeen keeps Wrap, Elevate and Parmenion – because three platform architectures are better than one – as well as 1825 and of course the asset management business.
More importantly, it gets oodles of money through the door before the back book decays into nothingness as a result of pension freedoms. And most importantly, it gets to run a big chunk of Phoenix money through Aberdeen Standard Investments (ASI) and probably gets to retender for that £109bn of Scottish Widows money, which flounced off in a cream puff the other week.
