News revealing Royal London has headhunted a boss from outside to head up its new IFA division - handling life, pensions, offshore and protection business lines - raises significant questions about brand intent going forward.
Further details of the new IFA division are as yet unavailable as it is only just starting up in January. That said, the beauty of a blog is it allows for some interesting speculation - for which I, obviously, alone take full responsibility!.
Think for a moment of activities in the industry earlier this year, specifically around branding changes involving Aegon and Scottish Equitable. Think also of how Standard Life, formerly the chief mutual rival to Royal London, has handled branding issues as it has moved to plc status.
Aegon has famously (or infamously if you are so inclined) turned Scottish Equitable into a sub-brand intended to force a stronger connection between product and service and the parent brand. Bigger is better in this case, as Aegon is clearly positioning its marketing message around corporate clients it says require the feel-good factor, which comes with dealing with a services supplier able to mix it across product lines and borders.
Another angle to this story is research just published by Brand Finance as to the value of brands as intangible assets. While that research does suggest intangible assets are proportionately less of the enterprise value of financial firms than, say, in the pharmaceutical sector, it is still a considerable portion.
It is obviously a different challenge to estimate a market value for a mutual than a plc, but such a barrier in itself is not a reason not to try to estimate the value of a brand, or what may happen to values if different brands are brought together.
In this case Royal London clearly sees more value being generated out of running previously separate businesses as part of a single entity – greater than the sum of its parts, as it were – but will the change also stretch to ditching brand names to reinforce the new order?
Could Royal London be thinking along the lines of Aegon, or similarly Lloyds TSB – another group which makes use of sub-brands for particular business lines? Or is it thinking along the lines of a HSBC, which firmly stamps the single brand on every line of business?
And, while we are in the speculating mood, should there be any questions raised over just what might happen to the business lines within the new single entity described as an IFA division?
This suggests a focus on distribution rather than manufacturing. Yet for a mutual, which may do both the decisions on whether to favour one or the other are not, perhaps, as clear-cut as for a plc answerable to pesky (institutional) shareholders.
Member values have to factor into decisions on where to nip and tuck in order to improve returns. In these days of the Tripple Bottom Line it may become increasingly difficult to explain to members of a mutual they will benefit by one part of the business taking a harsher line against another.
Finally, while the comments above centre on the Royal London group by way of example, the questions raised are equally valid to a number of organisations, not least because 2007 could mark another turning point for the life and pensions sector.
The government has just managed to upset the apple-cart on long-term savings, again, through the PBR, while the increasingly tight monetary policies being followed here and abroad suggest the bull run on equities markets of the past three years may be coming to a halt.
This would be challenging news indeed to any of the provider firms that have been trying to dig their product ranges out of the hole of with-profits, even as they struggle to come up with ways to spin compulsory savings through the workplace as anything other than just another tax on earnings - as they will no doubt be described once the great British public wakes up to their presence.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Jonathan Boyd on 020 7484 9769 or email [email protected].IFAonline
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