Standard Life Aberdeen promises benefits of economy of scale as it sets aside £35m for Mifid II bill

Announcing a budget of around £35 million to pay for investment research as required by Mifid II, Standard Life Aberdeen head of distribution Campbell Fleming has confirmed that the global scale derived from the mega-merger that created the firm has allowed it to pay for research in a way that will eventually allow it to pass the economy of scale to clients through lower fees.

Edinburgh-based SLA, a £655 billion fund giant, was formed as a result of the merger last autumn of Standard Life Investments and Aberdeen Asset Management.

At the time of the tie-up, the two firms said the amalgamation would allow them to absorb all research costs relating to the new Mifid II regulation starting from 3 January, the same day the European rules were implemented.

Under the Mifid II legislation, asset managers need to disclose how much they pay brokers for investment research separately from trading costs.

Firms have to declare whether they pass these costs to their clients or pay for it out of their own pocket.

SLA had previously announced an annual research cost of £10 million from Aberdeen, while Standard Life Investments was going to spend around £25 million from 2018 onwards.

In an interview with Money Marketing, Standard Life Aberdeen head of distribution Campbell Fleming, said: “We have a significant research capability. We have people on the ground, we are leveraging that base together. One of the big benefit of the merger is that we are generating over £1 billion in revenues now. We’ll take the cost of research on to our expenses, over £34 million.

“Also, because we are such a big firm now we are able to enjoy efficiency so that the total cost of some of the funds we manage as we merge them and put them onto a single platform, they will drop and pass benefit to fund holders and clients.”