Royal London has revealed it is working on ways to give “retiring non-advised customers” access to independent and impartial advisory firms at a lower cost than in the open market.
The group’s latest report for the year to September detailed the plans, with chief executive Phil Loney explaining to FTAdviser that while the firm supports the guidance guarantee - and is in fact working with the Pensions Advisory Service and the government “nudge” unit to increase customer take-up - they do not believe it will be enough.
“The sheer amount of lethargy and consumers lacking confidence will be a problem from next April, so we want to come up with other ways to make sure retirees get some form of financial advice.
“We’re in conversation with various organisations which have models that would allow advice to take place online or over the phone, thus reducing costs. This will still be paid for advice in line with the RDR, but the cost of sourcing clients would be reduced and it should enable better tariffs, with customers playing less than in the open market.”
It also plans to look at product solutions, such as its open market annuity panel, rather than offering only in-house products.
Mr Loney said that these plans would most likely be rolled out post April, as it was important to see how the government’s guidance works in practice, but that Royal London wanted to “raise a flag” to say it was work on some kind of mass market advice solution.
“We’d love to see a low cost advisory regime and we’re encouraging the FCA to speed along its work on this,” he added.
Furthermore, the results revealed Royal London more than doubled its new business in the group pensions market over the last year, while in the drawdown space it now accounts for over a quarter of the insured advised market.
Total continuing new life and pensions business was up 39 per cent at £3.58bn from £2.58bn in September 2013.
The Ascentric wrap platform had net new assets of £976m, although this was down from £1.25bn last September. Assets under administration were up 25 per cent though, to £8.4bn.
The report noted its platform was in the process of replacing back office technology to provide a foundation for future operational efficiencies and further growth.
FTAdviser revealed that this would be delayed until the fourth quarter of 2015. Mr Loney added that there was a huge demand for technology upgrades, but that Ascentric was “at the front of the queue”.
He stated that as Ascentric is also a “significant player” in the platform drawdown market, the firm has taken advantage of advisers recommending ‘capped’ drawdown to clients.
“Further enhancements to our advised drawdown offering are planned to enable advisers to meet the broader range of customers who will be interested in drawdown in the future.”
