Whether the Standard Aberdeen deals goes ahead or not, it’s quite clear that active fund managers are feeling the pinch and that consolidation will follow. Here’s one commentator in the FT summing the deal up.

 “The collective headwinds for the sector are proving too much to bear alone for many asset managers. The relentless rise of ETFs, persistent fee pressure, struggling fund performance, rising regulatory costs and higher capital requirements are making life tough for sub-scale asset managers.”

It is easy enough to see what’s in it for the senior management and shareholders of the two businesses, but these will be anxious times for the fund management industry’s bloated cortege of sales and marketing specialists. The tremors will be spreading throughout the cities of Edinburgh and London, it is time to pull in the belt a couple of notches.

Consumers (e.g. policy and unit holders) will be wondering just what is in it for them. The bonus pay-outs of the 90’s when mutuals like Standard paid off their members with cash windfalls are long gone. What is most significant about the touted title of the new entity “Standard Aberdeen” is that the life has been sucked out of it. Not only have consumers lost the protection of mutuality, but they are now losing the sense of purpose that underpinned the Scottish life insurance business.

The disposability of a life book is not as simple as changing a name. The Standard Life with and not for profit funds will continue to support the guarantees issued to policyholders in the past, but the new business looks to be about managing wealth not insuring against poverty.

Here’s what this Scottish life company , founded in 1825 says about itself in its internet profile

Standard Life plc is an investment company with headquarters in Edinburgh and operations around the globe.

Not much about widows and orphans there!

The loss of capacity to insure against calamities such as death and long-term illness, the loss of guaranteed returns on endowments, whole of life policies and of course annuities is not headline-grabbing, but it is significant.

It is easy enough to account for a business which is effectively valued on its assets under management but this is no longer an insurance business, it is a scaled up asset manager with a back-book of insurance liabilities. I am far from clear of the social purpose of the new entity.

It’s not as if divesting yourself of guarantees and focussing on making a turn from insured platforms is a new idea – Zurich ditched its life insurance interests in the late 90s.

Nor do I sense that there is any new idea about product development or distribution. Both Aberdeen and Standard have been reactive to the needs of advisers but neither are bringing  new ideas to the market (As Vanguard and L&G are doing). Banging the heads of two marketing teams together will leave sore heads, but I’m not sure we’ll get much beyond the concussion.

And I’m certainly not convinced that the buying  public will see a brave new investment opportunity in this. GARS- Standard Life’s flagship investment product has been a damp squib over the past two years, Aberdeen has been haemorrhaging funds for some time as emerging markets go through a poor period. Putting together two asset managers lacking in confidence and telling them 1000 jobs will go, does not make for an exciting consumer proposition.

My impression is that Aberdeen’s Martin Gilbey has run out of good ideas and is seeking some protection from a friendly neighbour. Standard Life is loved by IFAs for supporting them but has lately turned from friend to competitor as it builds its own sales force. Without the life brand and with a bunch of hustling fund platforms (including the Aberdeen owned Parmenion), snapping at its heels, Standard looks like a business that is losing its mojo.

This deal makes sense on a spreadsheet, but for those of us thinking of the consumer implications, it looks a tame affair. The texture of UK financial services is being weakened by the loss of its insurance capability, the entrepreneurship of the fund management sector is being diluted by corporatism.

Frankly this does not look like 1+1 = 3; it looks like 1+1 = <2 – at least as the customer sees it.