The chief executive of Scottish Widows warned that there could be a “sizeable” reduction in the adviser market in years to come, but added that the company was determined to keep expanding its intermediary channel.
He reaffirmed its commitment to the adviser market as it announced a 15 per cent rise in business from its intermediary channel, outstripped by a 26 per cent increase in direct business.
Mr Strauss said the firm had seen a “marked increase” in orphaned investment clients as a result of the RDR, but did not perceive the company’s direct offering as competing with its intermediary arm.
He said: “There are many clients who are not prepared to pay for fees, and our direct offering is growing in response to that. But we are different from other life companies in the sense that our direct offering is not a strategic intention, but a reaction to ensure our existing customer base is properly serviced.”
Business on the individual pensions side reduced “substantially” due to the RDR, down 19 per cent, but was nonetheless “higher than anticipated”.
Mr Strauss added: “Individual advisers are really helping customers clean up legacy pension schemes… and we’re benefitting from this movement.”
Mr Strauss also said he was “worried” about the market’s ability to handle a potential bottleneck in auto-enrolment in the next two years. “The market will have to create completely different and far less complex processes for smaller firms, with more of a focus on ‘cookie cutter’ schemes that are easier to deal with.”
|Keith Thomson, director of Dundee-based Blackadders Investment Services, said: “Scottish Widows has a strong history of dealing with IFAs, and having acquired new connections through Lloyds Banking, its model has evolved. However, new business in direct distribution will be more limited, although profitability could well improve.”|