Eye on intermediaries - Pensions and Retirement Income - UK - February 2009
he combination of a rapidly greying UK population, considerable improvements in longevity and declining state and occupational pension provision, has made retirement planning more important than ever before. While past generations will have benefited from more generous pension arrangements, an increasing number of people are finding that they themselves are responsible for ensuring a comfortable retirement. As a result of these factors there is strong reason to believe that demand for pension and retirement income related advice should increase considerably over the long term.
In the near term, however, prospects for pension intermediaries are much less favourable as the economic and regulatory environment is making things especially challenging. From the consumer side of things difficulties in the economy have led more people to focus on immediate issues, such as paying down debt or facing the prospect of unemployment, rather than long-term pension savings. At the same time, changes in the regulatory environment have made running an IFA firm ever more burdensome, increasing the likelihood of further consolidation within the industry. Indeed, the number of directly authorised retail intermediary firms has fallen by more than 13% over the last three years.
This report presents an overview of the key issues affecting the market for pension and retirement income intermediaries. In addition to examining the wider economic, demographic and regulatory environment, the report details the value of new individual pension and retirement income business generated by each specific intermediary channel. Furthermore, the report also highlights market strengths and weaknesses and identifies potential market opportunities and threats.
The final section of the report presents the findings of Mintel’s exclusively commissioned IFA research survey. Here the reader is provided with valuable insight into how pension IFAs feel about their prospects, client expectations, as well as opinions on the regulatory environment.
Regulatory changes associated with the FSA’s retail distribution review and TCF initiatives are making it increasingly difficult for smaller directly regulated IFA firms.
Increased capital requirements threaten to put many smaller IFA firms out of business and will likely force many to join national IFA networks.
Difficult economic conditions have lead to a decrease in the demand for individual pension products in the past year.
Lack of affordability, as well as unawareness, apathy and distrust of advisers are additional factors currently holding the market back.
The introduction of Personal Accounts in 2012 could adversely affect pension intermediary business.
Longer term demographic and social trends are much more positive for the industry (ie a gradually older and more affluent population, decreased occupational and state pension provision, increased job mobility).
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