Prudential is planning to spend £100m developing further initiatives, in a bid to tackle falling annuity sales, including developing an online investment platform and launching Pru-branded Isas.
The investment is set to be made over the next two years and is equivalent to 14 per cent of the UK division’s annual operating profits.
According to sister title the Financial Times, investors were briefed about the plans by Jackie Hunt, the former Standard Life executive drafted in to run Prudential’s UK business a year ago.
The FT quoted Ms Hunt as saying: “We have almost no way in which customers can interact with us on a digital basis.
“It’s the way customers want to deal with us; it’s the way advisers want to deal with us.”
The UK’s biggest insurer by market value reported a 43 per cent drop in annuity sales during the first half, although the slide was slowed by sales of with-profits bonds and bulk annuities.
Ms Hunt said the £100m investment would fund a “very broad based range of products and propositions”, including developing “with profits” and “income drawdown” offerings as well as Isas.
In the first half of this year, Pru’s four new bulk annuity deals generated new sales of £104m and new business profit of £69m. There were no bulk annuity transactions in the first half of last year.
In March, FTAdviser reported that Prudential was planning to increase its emphasis on bulk deals this year in the wake of the radical pension reforms, after it signed up £600m from a £3.6bn contract to provide annuity cover for members of the ICI Pension Fund.
Furthermore, Pru’s nationwide survey of retirement specialist advisers showed that 61 per cent of IFAs expect a rise in turnover and profit from April 2015 onwards, with 8 per cent expecting a significant increase.
Encouraged by the initial reaction of savers to the Budget plans for increased pensions flexibility, two-thirds of firms surveyed reported a rise in client enquiries and demand for advice.
Confidence is translating into concrete plans, with 28 per cent of companies planning to recruit more advisers and 18 per cent planning to recruit additional paraplanners to meet the forecast rise in business.
Establishing professional connections will be a particular area of focus, with 37 per cent of advisers looking for partnerships with tax specialist firms and 23 per cent planning on tie-ups with specialist legal advisers.
Paul Harrison, head of business consultancy at Prudential, said: “While the final detail of the new rules has yet to be clarified, it’s clear that advice and financial education will be crucial in ensuring success under the new pensions regime and that advisers are embracing the opportunities.
“We’re seeing that advisers are reviewing their business models as they look for growth opportunities. For many firms this means making more efficient use of paraplanners, recruiting more staff and seeking to establish professional tie-ups.”
