According to Fidelity’s new retirement man, the asset management firm opted to focus on this particular market after 18 months of strategic reviews into its operations by acquiring Annuity Direct. He said the conclusion of this analysis was the realisation that years of helping customers accumulate wealth must now be matched with a service that guides them on what this money is often used to finance.
Mr Parkin said: “Fidelity has always been good at helping people accumulate wealth, but not in how to manage retirement. A couple of years ago we ran a poll and two-thirds of our assets are being saved for retirement. It is a very big issue for most of our investors.
“The retirement market is something we have been looking at for a long time and in the past 18 months we have seen a significant increase in interest. People need help at retirement and we are very keen to support advisers to help develop their at retirement needs.”
Mr Parkin has been at Fidelity for 12 years and before his promotion was previously head of proposition for the firm’s defined contribution and workplace savings business. When asked why he was the best man for the job, he responded that his investment expertise and familiarity with Fidelity’s product development gave him a massive advantage over external candidates and those with more sales expertise.
As should be expected of anyone considered for such an important role, one thing Mr Parkin does not lack is ambition. Despite still being at the very beginning of his tenure, he is already rubbing his hands together at the prospect of beating competitors and improving what he sees to be a stagnating market.
Some have been scratching their head at Fidelity’s decision to enter such a crowded sector, but Mr Parkin said there was plenty of opportunity for providers who presented a different and more effective approach. Overall he explained that Fidelity will seek to add a more personal touch to at retirement wealth management by consulting with the customer first and not focusing solely on the capabilities of its products.
He said: “I think there are huge opportunities for firms in this market to cover a different approach to the problem. This isn’t about products but customer needs. There is not a provider out there who is focused on these needs. Most providers talk about how great their products are, whereas what is really important is helping customers manage their total income sources.
“If you are an insurance company selling annuities, you are by definition product focused. We have a broader relationship with our customers, which means we can have a more elicited view on what they do.”
And this was not the only warning signal that Mr Parkin sent out to his retirement competitors. As part of Fidelity’s plans to put more emphasis on the needs of the customer, he said it was paramount to address the complacency surrounding annuities and the lack of access to drawdown.
Despite applauding the Association of British Insurers on its efforts to promote a more competitive annuity market, he stressed that a lack of new entrants in recent years has held the sector back. Moreover he also urged providers to stop referring to annuities as a one-stop solution for all and to instead focus on alternatives that could better serve each individual requirement.
Mr Parkin said: “There is an assumption that annuitisation is the best way to go but it is a question of timing. We are concerned it is about helping people buy the best annuity, rather than looking at whether annuities are the right product in the first place. Shopping around is great as an idea but could mean shopping around for the answer to the wrong question.”
As part of Fidelity’s goal “to help clients meet their aspirations and move closer to delivering their best possible retirement outcome”, he added that other products such as drawdown must also be considered. He added: “We are looking at how we can democratise drawdown.
“Drawdown is seen as an answer to people with very large pension pots. The benefits of income drawdown should be available to a much wider group. Of key importance is giving people the ability to defer annuity purchases until they are in a position to fully understand their financial situation.”
According to Mr Parkin, the solution is to keep an open mind when exploring the best possible options for retirement, which should vary according to a precise understanding of each customer’s aspirations and circumstances. He stressed that he was a fan of annuities and income drawdown, before adding that neither should be regarded as a definite solution to every single circumstance.
The benefit of prioritising a customer-focused approach over market-leading products was likened by Mr Parkin to default lifestyle pension funds. Fidelity’s new head of retirement explained how a recent poll showed one-third of Fidelity’s customers did not retire at the specified default age and as a result missed out on making substantial gains to their pension pots.
He said: “Default lifestyle funds are great but if they are reducing risk ahead of time then people are missing out on potential returns. A lot of money can be lost from having the wrong investment strategy.”
Although he started his dream job just recently, it would appear that Mr Parkin’s initial plans to revamp the at retirement market have been years in the making.
Daniel Liberto is features writer for Financial Adviser
Career ladder
November 2013 – Head of retirement, Fidelity
May 2013 – October 2013: Chief executive officer, FIL Life Insurance (Ireland) Limited
September 2002 – April 2013: Head of proposition, DC & workplace savings, Fidelity
August 1998 – September 2002: Director, product development, Phillips & Drew/UBS Global Asset Management
July 1991 – August 1998: Consultant, Asset Consulting Group, Towers Perrin
November 1988 – August 1989: Standard Life Assurance Company
April 1988 – October 1988: National Westminster Insurance Services
