François Robinet is a man on a mission – to encourage advisers and their clients to see longevity as an opportunity, rather than a potential “financial nightmare” due to inadequate retirement savings.
The chief executive officer of Axa Life Invest believes that investors need products (or “solutions”, as he prefers to call them) that can guarantee a minimum level of income for a longer retirement, as well as locking into any potential capital growth.
That is why the Frenchman hopped on an early Eurostar train to London to talk about unit-linked guarantees and why British advisers should be paying closer attention to them.
He said: “Following the financial crisis, we have really confirmed our commitment to this type of product for three reasons: it truly answers the needs of customers, advisers and distribution networks; we have invested a lot in the Axa global platform, the teams and the resources to manufacture this complex product; finally, we believe Axa demonstrates the financial strength necessary to make this work and to help clients trust us.”
Mr Robinet identified a number of key factors that could propel the popularity of unit-linked guarantees, not just in Britain, but across the world.
As the head of a global business, Mr Robinet was quick to recognise “aggressive” quantitative easing in key markets such as Japan, and how it has created a universal dilemma for savers.
“Low interest rates are a familiar story in Japan but there is more awareness of this in the US and the UK now. It has made people realise that their retirement income will not be enough unless they grow their capital during their working lives. In order to do this in real terms, adjusted for inflation, you need to invest in risky assets, not just bonds.
“In countries such as the US and the UK, risk appetite for equities has historically been a lot stronger than in Japan, Switzerland and France – the latter in particular is very fond of certainty. But we’ve had feedback from advisers and distribution partners that shows a growing acceptance of risk.”
Paradoxically, those same investors have become highly risk-averse following the financial crash, something Mr Robinet completely understood. “This is not only irrational fear. Investors have experienced one of the biggest crashes of all time. The need for protection and guarantee has never been as high as it is now.
“People can’t stand the kind of market volatility we’re seeing now. The goal of providers and products should be to eliminate this extreme volatility.”
Furthermore, Mr Robinet warned that many people are simply underestimating just how long they will live and may fail to save enough for their retirement as a result. “Retirement will be a very long, significant part of people’s lives, and their level of income may not be enough.”
The answer is a form of financial protection against a potentially toxic situation, Mr Robinet suggested. “Firstly, we would hope that markets pick up again so that investing in a fund would be sufficient.