Life InsuranceSep 7 2016

Firing Line: Richard Rowney

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The new boss of LV claims that while his business is “entrepreneurial”, much of the financial services industry is “dragging its feet” over innovation.

Richard Rowney, chief executive of the Bournemouth-based mutual life office, has been in the job for just over a month, but has been in the business for nearly 10 years.

He said: “I feel LV can be a challenger brand. We’re a very agile and entrepreneurial company. Following pension freedoms, we took eight days to create a one-year fixed-term annuity, so we can move a lot faster than bigger institutions.”

LV sold £1.5bn of retirement products in 2015, up from £1.3bn the previous year, no doubt helped by the pension freedoms. The life division, which Mr Rowney was in charge of before his current appointment, made an operating profit of £41m against a loss of £7m the previous year.

But LV is also a substantial player in general insurance, making an operating profit of £72m in 2015. In total the mutual made an operating profit of £195m last year.

The previous chief executive, Mike Rogers, built the company up from 1,700 to 6,000 staff over the past 10 years, but decided last April to step down. Mr Rowney was the leading internal candidate to replace him.

The challenge now is that the pensions industry is undergoing massive change, and Mr Rowney believes he is better placed than many of the larger companies to take advantage of that.

The mutual has already done well with the launch of a shorter-term protection product, Personal Sick Pay, and, more widely known, it is trying to get ahead of the game with automated advice, and the launch of Retirement Wizard.

This is a service that guides people through their retirement choices, for a small fee, and is pitched at those who would not ordinarily think of going to see a financial adviser.

Mr Rowney said: “We have a number of conversations with financial advisers, who say: ‘We really like the technology you’ve developed, and we’d like to bring that into our existing business models.’

“This is for people who would never have received advice at all.”

So far 5,000 people are using the service, with only one person wanting the initial £199 back on their factfind and retirement report (although Mr Rowney suspects this might be a competitor testing them).

Describing the response from the financial services industry as “amazing”, he said: “There are 40 big blue chip companies which are in advanced discussions about how they can use it.

“But we’re not going to push it too hard from an LV brand. Are we going to close the advice gap by doing this as LV on its own? No. Are we going to close the advice gap either as Retirement Wizard or white labelling it, allowing others to put it out as their own brand?” He thinks, maybe.

However, he claimed he was pushing at more of a closed door with the concept of the pension passport, or pension dashboard.

This idea, supported by former pensions minister Steve Webb, now director of policy at Royal London, aims to see technology enabled to allow people to oversee all their pension pots in one place. The plan is that this would focus people’s minds on how much they will have to live on when they retire, and take more control of their savings.

Mr Rowney said: “I think it could be done in six months, but I see a lot of people in the industry dragging their feet. If there’s one thing I could change, I would like the government to be more aggressive in terms of what the industry needs to do.

“I think for some companies who have larger back books – are they really committed to the Open Market option? While they do as much as they can to move forward, it is not necessarily in their shareholders’ best interests.”

While some of his competitors are gradually pulling out of annuities, Mr Rowney remains committed, largely because LV offers fixed-term annuities. “You can change the risk profile of annuities by making them fixed-term,” he added.

Something he would really like to change is people’s approach to financial services – assisted by Retirement Wizard. He said: “People are quite cynical and quite mistrusting, feeling they’re going to be ripped off.”

But as with the success of Retirement Wizard, he believes the life industry has to adapt to the new digital environment. He said: “I think people will use digital in a smart way, and know when they need to get quality advice. But most of the stuff they do is transactional.

“It will require an element of combining greater digital user experience, while being aware that there are times when people need to talk to a person, and when they do that, meeting should be as great an experience as possible.”

Melanie Tringham is features editor of Financial Adviser

2010 - 2016 LV managing director, life and pensions

2007 - 2010 LV chief operating officer

2005 - 2007 Barclays Bank, integration director

2003 - 2005 Barclays Bank, chief operating officer, premier banking

2001 - 2003 Barclays Bank, risk director, small business

Prior to this Richard held various roles across Barclays corporate and retail banking between 1992 and 2001.