Group is one of five major life offices looking to challenge existing fund models
Standard Life predicts it can secure assets worth around £2.6bn in three years for external managers linking to its funds platform, one of five being launched by major life offices.
Prudential, Abbey National, Skandia and Norwich Union all have wrap projects under way, while Scottish Widows is in the preliminary stages of developing its own service.
Fund platforms enable investors to buy, for example, a Standard Life Isa or pension, linked to the funds of their choice, including external providers. Similar to fund supermarkets, the life office will handle all the administration, consolidating the costs and paperwork to just one company.
The platforms vary between fully electronic, meaning intermediaries can transact online, and those that are mainly paper-based.
Standard Life, which plans to launch phase one of its service early next year, will extend the range of external fund links on its products, although it will be tailored for different segments of the market. Standard Life will handle the client servicing and administration of the products featured. These include retail pensions, group and individual, corporate pensions, Isas and income drawdown plans. In the longer term, the group will redevelop its life bond proposition to include external funds.
According to Standard Life's proposal to fund groups, this offers external providers reduced sales and marketing effort, consolidated fund transactions and lower admin costs. In return, the mutual wants a limited range of funds for which it will pay institutional prices, 0.3% annually.
Standard Life is seeking popular portfolios from groups willing to deal on these terms. It will feature 20 external funds for its core retail pension plans, 10-15 for large corporate pension schemes and 50-60 for its mutual funds platform.
Investment Week understands groups that have been approached include New Star, Invesco Perpetual, DWS, M&G, UBS, Fidelity, Newton, Gartmore and JP Morgan Fleming. Funds to be included will be announced during September.
Standard Life believes a 0.3% annual management charge is appropriate based on estimations it will generate cashflows starting at around £65m per year per manager. Despite the discount given to Standard Life, initial and annual charges to the end investor are expected to remain the standard 5% initial, 1.5% annual, although flexibility via commissions may be built in.
Other wrap services being launch include the Pru's plans to expand its two consumer-facing fund supermarkets, Funds Direct and Egg, and add Sipp and Ssas capabilities. The service is meant to launch this year, although it has already suffered some delays.
Norwich Union has taken a 20% stake in Millfield's personal portfolio services venture, the Lifetime Group, with the aim of allowing intermediaries to use it in the future.
Lifetime was established in June last year to provide online personal portfolio and investment services to advisers and their clients. With the backing of Norwich Union, it plans to incorporate features such as allocation tools and a fully integrated tax/product wrap capability by the end of the year.
In June this year Investment Week exclusively revealed Abbey National for Intermediaries was to launch a wrap service designed to consolidate Isa, Pep and Sipp accounts under one web-administered umbrella platform. The platform, to be launched on 25 September, will at first contain four separate individual wrappers, the James Hay Sipp, Abbey national branded Isa and Pep accounts and a personal portfolio that can contain unit trusts and Oeics from other groups.
In the next six months after the platform launches, Abbey intends to add its own branded onshore and offshore bond accounts plus a mortgage facility allowing users to offset the interest they pay on direct investments in the platform against their mortgage.
Skandia's platform, Skandia Wrap, was launched in June and incorporates the group's Isa, onshore investment bond, pension and protection products, as well as offering portfolio management services provided by Skandia Investment Management. In effect, the Skandia service amalgamates the group's product extranets and fund supermarket into one entity with a further layer of functionality.
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