Firing Line: Adrian Grace

Firing Line: Adrian Grace

Adrian Grace, chief executive of Aegon UK, has a reputation of being a forceful businessman.

When he took over as chief executive in 2009, he went about turning the business, which owned the venerable Scottish Equitable brand, from a conventional life office to an investment-focused platform company, disposing of divisions and thousands of employees along the way.

Now he is bedding down the acquisitions of Cofunds, made in 2016, and Blackrock’s defined contribution workplace savings platform, and is ready to make even further acquisitions.

Article continues after advert

So what does he make of the traditional life office model?

He said: “I think that’s over. Those who think it will survive will not survive. We have to make choices now – I don’t think you can do all the things that a traditional life office did. Those that are hanging on will find that there are specialists around them that will take different pieces of the pie: some will do asset management; some will do risk protection; some people are going into platforms. 

“People are starting to make decisions on which of these is right for them; those who are trying to do everything will struggle – they will find aggressive competition wherever they go.

“It’s about scale in every area of business and if you don’t do it you will fail.”

Earlier in 2016, before buying Cofunds, Mr Grace sold the annuity book to Legal & General. Why was he so keen to get out of traditional pension contracts?

Mr Grace said: “When you go back to when a lot of those decisions were taken, it became very clear to us that [this area] was not very attractive, because of the introduction of Solvency II, the capital volatility associated with annuities was very significant. We felt in a declining market with capital volatility and with poor value for customers, we felt there wasn’t a market that had a future.

“You have to balance liabilities and assets and you back them with equities and bonds. We’ve been in a bull run for quite a long time and some time those bonds will default in a down market and the volatility will increase. We decided while the going was good to get out of that market and get into the fee-based sector.”

Mr Grace is clear that his vision for Aegon now is to be “adviser focused ... we’re trying to build the services to support the needs of advisers. We don’t want to take advice risk ourselves, we think that’s a specialist area and that’s something that advisers are well-equipped to take on. We want to offer all the services that advisers need to take on and work in partnership with them.”

To this end, Mr Grace makes a big distinction between his company and Standard Life Aberdeen, which has just offloaded its own pension book, has a big platform and is building its own financial advice business, 1825.