8th July 2014

Aegon: It’s evolution not revolution that’s required

Many commentators say that we are undergoing a revolutionary change, I prefer to say we are in a period of evolution, which is impacting on all areas of our profession and the world in which it operates. I see four main areas that every business in our profession needs to address:

1. The UK population is ageing, that means our clients are aging too.
2. The budget has ensured that retirement is as flexible as it has ever been throwing up many advice opportunities.
3. The Financial Conduct Authority (FCA) is determined to ensure our profession offers a tangible service to our clients both initially and on an ongoing basis -with a transparent proposition and charging structure. Put simply people should know what they are paying for.
4. Advisers are seeking to ensure profitability in their business by maximising the engagement and revenue with existing clients as we see more and more firms adopting a hunter/farmer proposition 
    

However, these challenges provide many opportunities and advisers are in a very favourable position when it comes to retirement. There will be a new focus on decumulation strategies, and changes are already putting pensions in a new light, making pension funding sound more aspirational.

The fact that we now have newspapers talking about the scope to buy sports cars with your pension fund, shows some new life has been breathed into the pension market and will drive consumers thoughts towards future hopes and aspirations, which all require advice.

This means the pensions market is ripe for development, a market in which 1 in 4 are unsure of the income they will get from their savings and where 63.3% of people have never spoken to an adviser about a pension*. I predict this will change for the better, as the seismic changes in the last budget filter through into everyday discussions.

The traditional client life journey has changed and so many advice opportunities are now available if we have a proposition and communications strategy that is tailored correctly. Take retirement, this is now more of a process than a single event. This will require an ongoing and in-depth advice dynamic that clients will value and pay for. So, in this evolving world there are four key elements that must come to the fore in the retirement market:

• When it comes to an aging population one size does not fit all and our propositions need to reflect this. We can’t treat all those going to and through retirement in the same way. Segmentation and the correct proposition are key.
• The budget has increased the awareness of pensions and will increase the demand for advice in all areas from transactional to the more in depth holistic approach.
• The FCA are watching so transparency and service will be the watchwords of the future.
• Profitability is key for advisers and the effective use of platforms and the benefits they deliver will aid both process delivery and profitability.

How well prepared is your business? Does your platform and your proposition allow you to meet client needs and ensure they consolidate their assets with you and your business? Does it also help with asset decumulation in retirement?

If not, do you need to review your at retirement strategy? 
 

* Source: Source: Aegon UK retirement readiness survey, July 2013
 

John Joe McGinley
Head of Business Brain Aegon

June 2014

DFM, Retirement