Steve Groves had a big decision to make in early 2016: what to do as the company he founded, Partnership Assurance, merged with its rival Just Retirement?
He took a decision to step back from an executive role, and has since landed two chairmanships - at Key Retirement and Retirement Bridge - despite being a relatively young age of 43.
It was a turbulent period for the former chief executive of Partnership. The company he founded following a management buyout went public in the summer of 2013. In March 2014, as George Osborne announced pension freedoms, the share priced tumbled 55 per cent in a single day due to its exposure to the annuity market.
Just Retirement, its long-time rival, witnessed a similar fate and plans surfaced to merge the two companies shortly after.
Mr Groves still dismisses pension freedoms as basically tax driven, and "going to end in tears", but maintains that both Partnership and Just Retirement could have soldiered on.
"Pension freedoms set us back three years in business volumes. There was an option of sitting back, but the option of doing a merger put you forward two years if pension freedoms hadn't happened.
For the benefit of shareholders and customers, both Partnership and Just Retirement decided a merger would secure their future. But ultimately, there can only be one chief executive running things, and Mr Groves took the decision to step down.
He said: "It was my choice. I've been doing the job a long time and ultimately I looked at it and what's at the end of it is many more years of what I've just done. I was happy to leave and it opened up the choice to do other things."
It is possible that he may go back to a full-time executive role: "My wife thinks I will, but it will be when I get religion; to go back to a new role and start a financial services business when I really want to change the market."
For now he has two chairman roles and several other interests not related to financial services.
Despite his relatively young age, Mr Groves believes he has a lot to offer, having been through some extreme times at Partnership.
He said: “I bring a few grey hairs and experience of managing a business over the longer term. My job at Key Retirement is to choose the chief executive and manage the board; the board sets the strategy, and [chief executive] Simon Thompson’s role is to manage and run the business.”
He said equity release has become a distribution business – with plenty of funds to lend now Solvency II means insurers have greater clarity over equity release loans. For the advice side of the business it is all about lead generation – equity release after all is not necessarily a repeat business – and so the company is looking at social media and other digital formats to increase their brand recognition.
Mr Groves said: “Equity release has an image problem, but in reality it doesn’t have a problem.”
The market has taken off, totalling £3bn in 2017, a new record. Part of this is a change in attitude from baby boomers, who are more open-minded about what to do with their property, and how much to leave to their children; but the market has also been helped by the likes of Legal & General and Nationwide making it more respectable.
In other parts of financial services, he is more concerned about the future, especially the legacy of pension freedoms. He believes it will have been a huge amount of effort for little reward, and will create a few casualties along the way.
He said: “When we stand back and look at it we will see very wealthy people who don’t need to buy annuities benefit; the removal of the annuitisation requirement meant that a few people with funds probably in £100,000 to £200,000 have slightly more options, but if they see a financial adviser they have that optionality. If they don’t get advice they’re getting bad outcomes.”
He said he has seen examples where entire funds are being drawn down. “We’ve devised a very small benefit that could be good for a small amount of the population. Freedoms and choice isn’t always good; it needs to come with people making the right decisions and I don’t think that’s always the case.
“My expectation is that we will see pensions and freedom will lead to the detriment to people without a financial adviser.”
Melanie Tringham is features editor of Financial Adviser
Steve Groves' career highlights
2018 Chairman, Key Retirement Group
2016-present Chairman, Retirement Bridge
2005 - 2016 Initially as chief finance officer, then managing director and chief executive, Partnership Assurance
2003 - 2005 Senior actuary, Swiss Re Life & Health
2000 - 2003 Executive head of business development, Britannic Retirement Solutions
