Standard Life Aberdeen’s (SLA) financial planning arm, 1825, is reportedly in exclusive negotiations with Grant Thornton’s wealth advisory business raising questions about the platform implications as an “utterly independent” advice business merges into a vertically-integrated firm.
According to Sky News, the £30m deal would see 100 employees join 1825 upon completion, including 30 financial advisers and “a handful” of partners.
However, CWC Research’s managing director, Clive Waller, questioned how the “utterly independent” advisers at Grant Thornton would integrate at Standard Life Aberdeen.
Grant Thorton runs on a “very customised” Aegon platform, formerly under the Cofunds brand, but Standard Life Aberdeen would “surely” wish to move clients to Standard Life Wealth. “I am not sure how this would be in client’s interest unless SLA offers them a very low price.”
He said: “It further demonstrates the wish to vertically integrate – platforms’ asset managers, life cos. I don’t see how this relationship between clients and the adviser business can last, especially as 1825 is restricted.”
Grant Thornton advisers may balk at 1825
Standard Life Aberdeen’s vertical model may not find favour with Grant Thornton advisers, said Gbi2 managing director Graham Bentley.
“I can see how GT’s advisers might balk at the idea of being subsumed into the 1825 structure, versus the caché of representing a major accountancy firm,” Bentley said. “If they lose that badge of being special, ie just absorbed into 1825’s existing structure, a number of those advisers may seek to join rival accountancy firms’ advice arms.”
Standard Life Aberdeen and 1825 have a “pretty average record” on IFA acquisition, added Waller. “Accountancy firms like totally independent, genuinely fee-based financial advisers.”
Grant Thornton caught in auditing spotlight
The reported price tag of £30m would probably be “chicken feed” to Grant Thornton, said Waller.
“GT overall have had their problems with a fine, dropping of a technology venture and the general focus on auditors, but none of that seems to justify the sale.”
Bentley agreed that Grant Thornton had a number of industry issues to face in its core business. “I can understand why a major accountancy practice might want to rid itself of the burden of financial planning business – compliance resource and costs, while the scandal-ridden audit industry is already reeling from the regulatory changes on the horizon,” he said.
