Canada Life predicts adviser group pensions RDR exodus
Remuneration for advice on group pension arrangements is likely to fall post-Retail Distribution Review and many smaller advisers may seek to leave the space altogether as it becomes less profitable, according to Canada Life.
Next year will be a challenge for both insurers and advisers alike, with the question of profit and earnings being a key driver for all involved in the sector, Paul Avis, marketing director of Canada Life Group, said.
In its predictions for the group risk market in 2013, Mr Avis highlighted that with with the RDR coming into force pension remuneration is likely to reduce for non-fee based advisers, whilst some smaller advisers may simply give up the industry altogether.
He said: “This has little impact on our market size and shape, as employers still have schemes that need support and will want to purchase group insurance products, but it could affect the structure of sales teams and distribution models.”
Mr Avis added that the lowering of the automatic enrolment thresholds for employees throughout 2013 will continue to force this subject up the agenda and could counter some of this adviser attrition as it creates opportunities to consult on scheme selection and management.
He said: “As group risk benefit advice has been sidelined, with a clearly understood focus on pensions planning, a significant opportunity exists for advisers to consult in this area.”
Mr Avis said that the trend for group income protection is still towards reducing premiums and the group critical illness market, though still far too small, is continuing to grow.
He said: “The question of profit and earnings will be a key driver for all involved in the sector. Premiums have to take account of an ageing workforce and the impact of long term low interest rates.
“Some segments are showing signs of recruitment and growth but this is still fairly limited and the bigger focus on market and profit growth has to be achieved by taking advantage of the wider environmental factors that drive customer behaviour.”