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Pensions - Intermediary Focus - UK - January 2013

“The next 12 months are set to be very challenging for intermediaries, as firms adjust to the new reforms and strive to sustain their profit levels under new adviser charging models. The recent contraction in the size of the intermediary population will probably persist, although the rate of decline should continue to slow.”

– Sarah Hitchcock, Senior Analyst – Financial Services

Some questions answered in this report include:
  • How confident are pensions IFAs feeling about their business prospects?
  • And how prepared are they for the post-RDR world?
  • What impact will the reforms have on the advice market?
  • And will it really improve consumer access to advice?
  • And what impact will the auto-enrolment revolution have on the market?

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Table of contents

  1. Introduction

      • Market definitions
        • Abbreviations
        • Executive Summary

            • The market
              • Adviser population continues to contract
                • Figure 1: Number of directly authorised retail intermediary firms, by primary category sector, 2006-12
              • Adviser share of individual pension business
                • Adviser share of occupational pension business
                  • Adviser share of annuity and drawdown business
                    • Key factors
                      • Advisers facing increased regulatory pressure…
                        • … and increased capital requirements
                          • Demand drivers
                            • Companies, brands and innovation
                              • The largest intermediary firms
                                • IFA networks providing regulatory support
                                  • The adviser
                                    • Adviser confidence continues to ebb away
                                      • Figure 2: Confidence in own business prospects compared to six months ago, 2009-12
                                    • Adviser concerns
                                      • Business intentions
                                        • Figure 3: Business intentions over the next 12 months, November 2012
                                      • Main challenges facing the pensions industry
                                        • Figure 4: Top five biggest challenges facing pension intermediaries, November 2012
                                      • Expectations in relation to new pensions business
                                        • Figure 5: New pensions business expectations for the coming year, November 2012
                                      • NEST impact on adviser charges
                                        • What we think
                                        • Issues in the Market

                                            • How confident are pensions IFAs feeling about their business prospects?
                                              • And how prepared are they for the post-RDR world?
                                                • What impact will the reforms have on the advice market?
                                                  • And will it really improve consumer access to advice?
                                                    • And what impact will the auto-enrolment revolution have on the market?
                                                    • Trend Application

                                                      • Customised advice that is worth paying for
                                                        • Auto-enrolment provides the means to tackle the pensions gender gap
                                                          • 2015: Brand Intervention
                                                          • Regulatory Context

                                                            • Key points
                                                              • At last, the new RDR regime is here
                                                                  • Figure 6: Summary of key regulatory requirements for the retail intermediary market, pre- and post-RDR
                                                                • Some advisers left it until the last minute to make the necessary changes
                                                                  • Figure 7: Adviser preparation for the RDR, Q1 2011 and Q3 2012
                                                                • Will charging fees create an advice gap?
                                                                  • More streamlined and simplified products and services will emerge to fill the gap
                                                                    • Could new technology and workplace marketing bridge this gap?
                                                                      • FSA to be replaced by two new regulatory bodies in 2013
                                                                      • Market Drivers

                                                                        • Key points
                                                                          • Workplace pension auto-enrolment will massively boost pension participation
                                                                            • Figure 8: Ownership of private pension, by product type and gender, January 2012
                                                                          • Who will the new reforms benefit?
                                                                            • How will the reforms impact pension providers?
                                                                              • But what of pension intermediaries?
                                                                                • Implications for pensions decumulation
                                                                                  • Figure 9: Share of external versus internal new pension annuity sales, 2002-11
                                                                                • Other issues affecting the pensions industry
                                                                                  • Overview of macroeconomic factors influencing client behaviour and pension fund performance
                                                                                  • Who’s Innovating?

                                                                                    • Key points
                                                                                      • RDR transitional tools launched by the larger networks
                                                                                        • Recent developments in the platform space
                                                                                          • Other new launches
                                                                                          • Market SWOT Analysis

                                                                                              • Figure 10: Pensions advice market – summary of strengths, weaknesses, opportunities and threats, 2013
                                                                                          • Size of the Intermediary Market

                                                                                            • Key points
                                                                                              • Contraction in the number of DA firms continues, albeit at a slower pace
                                                                                                • Figure 11: Total number of directly authorised retail intermediary firms, 2006-12
                                                                                              • The financial advice sector remains the most resilient
                                                                                                • Figure 12: Number of directly authorised retail intermediary firms, by sector (primary category only), 2006-12
                                                                                              • Number of finance ARs has also fallen over the past two years
                                                                                                • Figure 13: Number of financial advice appointed representatives and directly authorised firms, by type, 2008-12
                                                                                              • Size of the overall retail investment adviser population
                                                                                                • Figure 14: Size of retail investment adviser population, by adviser category, 2011-12
                                                                                            • Adviser Share of Individual Pensions Business

                                                                                              • Key points
                                                                                                • Prior to the RDR deadline, intermediaries fell into just two broad categories
                                                                                                  • Intermediaries play a huge role in the sale of individual pension products
                                                                                                    • Figure 15: Proportional distribution of total new individual pension premiums, by sales channel, 2008-12
                                                                                                  • Between 2009 and 2012, IFAs grew their market share
                                                                                                    • Figure 16: Total new individual pension business – regular premiums, by sales channel, 2008-12
                                                                                                    • Figure 17: Total new individual pension business – single premiums, by sales channel, 2008-12
                                                                                                  • Direct sales are very rare, apart from in the individual stakeholder market
                                                                                                    • Figure 18: Proportional distribution of new individual pension business by sales channel and product type, 2012
                                                                                                • Adviser Share of Occupational Pensions Business

                                                                                                  • Key points
                                                                                                    • Most occupational pension business is sold with advice
                                                                                                      • IFAs retained their large share of the occupational pension sector in 2012
                                                                                                        • Figure 19: Proportional distribution of total new insurer-administered occupational pension premiums, by sales channel, 2008-12
                                                                                                      • IFAs grew their share of regular-premium business, despite a fall in income
                                                                                                        • Figure 20: Total new insurer-administered occupational pension business – regular premiums, by sales channel, 2008-12
                                                                                                      • Single-premium business boosted by direct sale of TIPs in 2012
                                                                                                        • Figure 21: Total insurer-administered occupational – single premiums, by sales channel, 2008-12
                                                                                                      • Distribution mix varies according to product type
                                                                                                        • Figure 22: Proportional distribution of new insurer-administered occupational business by sales channel and product type, 2012
                                                                                                    • Adviser Share of Retirement Income Business

                                                                                                      • Key points
                                                                                                        • Non-intermediated sales are fairly common in the annuity market…
                                                                                                          • Figure 23: New pension annuity premiums, by sales channel, 2008-12
                                                                                                          • Figure 24: New pension annuity premiums, by sales channel, 2008-12
                                                                                                        • … but are virtually non-existent in the drawdown market
                                                                                                          • Figure 25: New income drawdown premiums, by sales channel, 2008-12
                                                                                                          • Figure 26: New income drawdown premiums, by sales channel, 2008-12
                                                                                                      • Adviser Firm Rankings

                                                                                                        • Key points
                                                                                                          • A fragmented marketplace, which is undergoing continual consolidation
                                                                                                            • Sesame Bankhall continues to lead the adviser market, based on turnover
                                                                                                              • Figure 27: Top 15 financial advisers in the UK, based on advisory turnover, 2011/12
                                                                                                          • Companies and Products

                                                                                                              • Sesame Bankhall
                                                                                                                • 2012 ranking
                                                                                                                  • Company description
                                                                                                                    • Service offering
                                                                                                                      • Financial performance indicators
                                                                                                                        • Figure 28: Key financial data for Sesame Bankhall Group Limited, 2010-11
                                                                                                                      • Recent activity
                                                                                                                        • Brewin Dolphin
                                                                                                                          • Ranking
                                                                                                                            • Company description
                                                                                                                              • Service offering
                                                                                                                                • Financial performance indicators
                                                                                                                                  • Figure 29: Key financial data for Brewin Dolphin Holdings, 2011-12
                                                                                                                                • Recent activity
                                                                                                                                  • Openwork
                                                                                                                                    • 2012 ranking
                                                                                                                                      • Company description
                                                                                                                                        • Service offering
                                                                                                                                          • Financial performance indicators
                                                                                                                                            • Figure 30: Key financial data for Openwork Limited, 2010-11
                                                                                                                                          • Recent activity
                                                                                                                                            • Intrinsic
                                                                                                                                              • 2012 ranking
                                                                                                                                                • Company description
                                                                                                                                                  • Service offering
                                                                                                                                                    • Financial performance indicators
                                                                                                                                                      • Figure 31: Key financial data for Intrinsic Financial Services Limited, 2010-11
                                                                                                                                                    • Recent activity
                                                                                                                                                      • Tenet
                                                                                                                                                        • 2012 ranking
                                                                                                                                                          • Company description
                                                                                                                                                            • Service offering
                                                                                                                                                              • Financial performance indicators
                                                                                                                                                                • Figure 32: Key financial data for Tenet Group Limited, 2010-11
                                                                                                                                                              • Recent activity
                                                                                                                                                                • Positive Solutions
                                                                                                                                                                  • 2012 ranking
                                                                                                                                                                    • Company description
                                                                                                                                                                      • Service offering
                                                                                                                                                                        • Financial performance indicators
                                                                                                                                                                          • Figure 33: Key financial data for AEGON’s UK distribution business, 2010-11
                                                                                                                                                                        • Recent activity
                                                                                                                                                                        • Advertising and Promotion

                                                                                                                                                                          • Key points
                                                                                                                                                                            • There is limited adspend by companies offering pensions advice
                                                                                                                                                                              • Figure 34: Advertising expenditure relating to financial advice and intermediaries, by sub-category, 2010-12
                                                                                                                                                                            • Metlife and Fidelity lead the way in advertising their retirement saving and income solutions to intermediaries
                                                                                                                                                                              • Figure 35: Top ten advertisers in the intermediary pensions and retirement income sub-categories, 2010-12
                                                                                                                                                                            • Press advertising accounts for the majority of the expenditure
                                                                                                                                                                              • Figure 36: Proportional distribution of advertising expenditure on pensions and retirement income advice, by media type, 2010-12
                                                                                                                                                                          • IFA Business Confidence

                                                                                                                                                                            • Key points
                                                                                                                                                                              • About Mintel’s IFA research
                                                                                                                                                                                • One in four pensions IFAs are feeling less confident about their own business prospects than six months ago...
                                                                                                                                                                                  • Figure 37: Confidence in own business prospects compared to six months ago, 2009-12
                                                                                                                                                                                • … reflecting a gloomy economic outlook…
                                                                                                                                                                                  • … and an increasing regulatory burden
                                                                                                                                                                                  • Impact of RDR and Other Market Factors

                                                                                                                                                                                    • Key points
                                                                                                                                                                                      • Almost half of all pension IFAs expect the RDR to negatively affect their business over the coming year
                                                                                                                                                                                          • Figure 38: Perceived impact of regulatory and other market developments on own business over the next 12 months, in order of positive influence, November 2012
                                                                                                                                                                                        • As the RDR reforms become a looming reality, many advisers are still pessimistic about its impact
                                                                                                                                                                                          • Figure 39: Perceived impact of the RDR on own business over the next 12 months, 2009-12
                                                                                                                                                                                        • Auto-enrolment is increasingly being viewed as a positive development…
                                                                                                                                                                                          • Figure 40: Perceived impact of auto-enrolment on own business over the next 12 months, 2009-12
                                                                                                                                                                                        • … but low-cost NEST poses a challenge
                                                                                                                                                                                          • Figure 41: Perceived impact of NEST on own business over the next 12 months, 2009-12
                                                                                                                                                                                        • Still work to be done to improve the reputation of the financial services industry
                                                                                                                                                                                          • Figure 42: Perceived impact of financial industry’s reputation on own business over the next 12 months, 2009-12
                                                                                                                                                                                        • Pension IFAs are feeling more positive about the investment climate
                                                                                                                                                                                          • Figure 43: Perceived impact of consumer confidence in stock market-based investments on own business over the next 12 months, 2009-12
                                                                                                                                                                                          • Figure 44: Perceived impact of consumer confidence in the housing market on own business over the next 12 months, 2009-12
                                                                                                                                                                                      • Business Intentions

                                                                                                                                                                                        • Key points
                                                                                                                                                                                          • Securing recurring revenue streams remains a key area of focus
                                                                                                                                                                                            • Figure 45: Business intentions over the next 12 months, 2009-12
                                                                                                                                                                                        • Core Challenges Facing Pension IFAs

                                                                                                                                                                                          • Key points
                                                                                                                                                                                            • Low retirement-saving priority by consumers is top challenge
                                                                                                                                                                                                • Figure 46: Biggest challenges facing pension intermediaries, November 2012
                                                                                                                                                                                            • Prospects for New Pensions Business

                                                                                                                                                                                              • Key points
                                                                                                                                                                                                • Twice as many advisers expect to their pensions business to grow over the next year than decline
                                                                                                                                                                                                  • Figure 47: New pensions business expectations for the coming year, November 2012
                                                                                                                                                                                                • More than a quarter think that that NEST will lead to lower advice and product charges
                                                                                                                                                                                                  • Figure 48: Expectation of pension product/advice charges going forward, November 2012
                                                                                                                                                                                              • Appendix – Adviser Share of Individual Pensions Business

                                                                                                                                                                                                • Personal pensions
                                                                                                                                                                                                  • Figure 49: New personal pension business – regular premiums, by sales channel, 2008-12
                                                                                                                                                                                                  • Figure 50: New personal pension business – single premiums, by sales channel, 2008-12
                                                                                                                                                                                                • Stakeholder pensions (individual)
                                                                                                                                                                                                  • Figure 51: New personal pension business – regular premiums, by sales channel, 2008-12
                                                                                                                                                                                                  • Figure 52: New personal pension business – single premiums, by sales channel, 2008-12
                                                                                                                                                                                                • Stakeholder pensions (employer-sponsored)
                                                                                                                                                                                                  • Figure 53: New personal pension business – regular premiums, by sales channel, 2008-12
                                                                                                                                                                                                  • Figure 54: New personal pension business – single premiums, by sales channel, 2008-12
                                                                                                                                                                                                • Insured SIPPs
                                                                                                                                                                                                  • Figure 55: New personal pension business – regular premiums, by sales channel, 2008-12
                                                                                                                                                                                                  • Figure 56: New personal pension business – single premiums, by sales channel, 2008-12
                                                                                                                                                                                                • GPPs
                                                                                                                                                                                                  • Figure 57: New personal pension business – regular premiums, by sales channel, 2008-12
                                                                                                                                                                                                  • Figure 58: New personal pension business – single premiums, by sales channel, 2008-12
                                                                                                                                                                                              • Appendix – Adviser Share of Occupational Pensions Business

                                                                                                                                                                                                • Defined-benefit occupational pensions
                                                                                                                                                                                                  • Figure 59: New DB occupational pension business – regular premiums, by sales channel, 2008-12
                                                                                                                                                                                                  • Figure 60: New DB occupational pension business – single premiums, by sales channel, 2008-12
                                                                                                                                                                                                • Defined-contribution occupational pensions
                                                                                                                                                                                                  • Figure 61: New DC occupational pension business – regular premiums, by sales channel, 2008-12
                                                                                                                                                                                                  • Figure 62: New DC occupational pension business – single premiums, by sales channel, 2008-12
                                                                                                                                                                                                • EPPs and SSASs
                                                                                                                                                                                                  • Figure 63: New EPP/SSAS business – regular premiums, by sales channel, 2008-12
                                                                                                                                                                                                  • Figure 64: New EPP/SSAS business – single premiums, by sales channel, 2008-12
                                                                                                                                                                                                • Trustee investment plans
                                                                                                                                                                                                  • Figure 65: New TIPs business – single premiums, by sales channel, 2008-12
                                                                                                                                                                                              • Appendix – Pension Product Definitions

                                                                                                                                                                                                  • Figure 66: Types of private pension provision, UK
                                                                                                                                                                                                • The decumulation or ‘at-retirement’ market
                                                                                                                                                                                                  • Figure 67: Overview of the annuity and retirement income market

                                                                                                                                                                                              Companies Covered

                                                                                                                                                                                              • Aegon UK
                                                                                                                                                                                              • AR
                                                                                                                                                                                              • AXA UK plc
                                                                                                                                                                                              • Bankhall Investment Associates Ltd
                                                                                                                                                                                              • Brewin Dolphin Holdings PLC
                                                                                                                                                                                              • Friends Provident plc
                                                                                                                                                                                              • Gateway, Inc
                                                                                                                                                                                              • Henderson Global Investors
                                                                                                                                                                                              • Honister Capital
                                                                                                                                                                                              • International Franchise Association (IFA)
                                                                                                                                                                                              • Intrinsic Financial Services
                                                                                                                                                                                              • Investment Funds Direct Limited
                                                                                                                                                                                              • JPMorgan Invest LLC (BrownCo)
                                                                                                                                                                                              • Legal & General Group PLC
                                                                                                                                                                                              • Lloyds Banking Group
                                                                                                                                                                                              • Matrix
                                                                                                                                                                                              • MetLife, Inc.
                                                                                                                                                                                              • Misys Plc
                                                                                                                                                                                              • Octopus Investments
                                                                                                                                                                                              • Openwork
                                                                                                                                                                                              • Origen
                                                                                                                                                                                              • Premier Mortgage Services
                                                                                                                                                                                              • Prudential plc
                                                                                                                                                                                              • Sesame
                                                                                                                                                                                              • Sinfonia Asset Management
                                                                                                                                                                                              • Skandia UK
                                                                                                                                                                                              • Tenet Group Ltd
                                                                                                                                                                                              • Threadneedle Investment Services Ltd
                                                                                                                                                                                              • Zurich Financial Services

                                                                                                                                                                                              Pensions - Intermediary Focus - UK - January 2013

                                                                                                                                                                                              £1,995.00 (Excl.Tax)