Friends Provident turns to Asia at the UK's expense

More new business is coming from Asia, leading the third largest pension provider in the UK to reallocate resources to this region.
After recently announcing 600 job cuts in the UK, Friends Provident CEO Ben Gunn says he is planning a large-scale expansion in Asia in line with a shift in the firm's growth strategy. The UK pension fund provider has been getting advice from JPMorgan, Goldman Sachs and Cazenove in its search for a suitable presence in Asia, either through a joint venture, partnership, minority stake in a local entity, or other means.

Friends Provident was founded in 1832 in the UK as a life insurance company. Today, it is the third largest pension provider in the UK, with $206 billion in assets under management worldwide. Outside the UK, it operates in Hong Kong, Singapore and Dubai and provides life, investment and pension products to around 2.5 million customers.

Asia is increasingly overtaking Friends ProvidentÆs home market in the UK and Europe by contributing 53% of the group's new business.

The Asia business "has grown very rapidly over a five-year period. We are very much focused on that growth. We continue to see Asia as the primary region driving the volume of our international business,ö says Gunn.

Friends Provident is a provider of investment-linked insurance and fund products to AsiaÆs independent financial advisors (IFAs). The company also makes use of tied agents, giving it a direct distribution network. Last year, the company recorded a 75% rise in new business sales in Hong Kong alone.

David Knights, general manager at Friends Provident in Hong Kong, says the demand for independent financial advice is on the rise, and attributes higher IFA sales to more complex investments.

ôBespoke advice is something the independent advisory sector is particularly well-placed to provide,ö Knights says. ôWe see significant growth potential in that particular market segment. There is plenty of headroom for the independent advisory market to grow further."

Knights believes the success of IFA channels can help shape Hong Kong and Singapore as key wealth management centres for the North and South Asian region over the long run.

Meanwhile, Gunn says he hopes to replicate the firm's success in Hong Kong and Singapore in other markets in Asia. China and Malaysia may be target markets.

Gunn is concerned with the proliferation of the joint ventures in China, however, and the ratio of success that foreign companies have experienced in working with local partners. Thus, he may be more inclined to begin in China by taking out small stakes with suitable and "like-minded" partners, which through their own channels should be able to provide satisfactory service to local customers.

ôWe are looking at the ones that have particularly good growth prospects in the areas where we excel,ö says Rocco Sepe, London-based managing director for international operations.
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