Table of Contents
Introduction
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- Abbreviations
Executive Summary
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- The market
- Total pension premiums up in 2010-11
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- Figure 1: New individual pension regular premiums, by product type, 2011
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- Figure 2: New individual pension single premiums, by product type, 2011
- Drawdown sales falter
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- Figure 3: Size of the pension annuities market versus the income drawdown market – new business, 2011
- Market segmentation
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- Figure 4: Value of new regular premiums sold through independent intermediaries, 2011
- The intermediary marketplace
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- Figure 5: Number of directly authorised retail intermediary firms, by sector (primary category), 2006-11
- The view from IFAs
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- Figure 6: Biggest challenges facing IFAs, November 2011
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- Figure 7: IFA expectations, November 2011
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- Figure 8: Where IFAs are recommending their clients invest their money, November 2011
- What we think
Issues in the Market
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- How will auto-enrolment impact intermediaries?
- What effect are technological advances having on platforms?
- How is the change to the retirement age impacting the pensions industry?
- Will the RDR see IFAs stop working with low to mid earners?
- What can be done to boost the annuity market?
Future Opportunities
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- Becoming savvy about pensions removes the dependency on IFAs
- NEST is for the masses but people may want some individualism
Internal Market Environment
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- Key points
- Pensions landscape is rapidly changing
- Intermediaries must be RDR ready … or else change their specialism
- FSA fines keeping the industry honest…
- … but pension advisers still face criticism for overcharging
- NEST will force many changes across the industry
- SIPP popularity will drive the advice business
- External volume of sales of new pension annuities reducing
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- Figure 9: External versus internal volume sales of new pension annuities – proportional distribution, 2000-10
- How does the OMO impact advisers?
Regulatory Environment
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- Key points
- Changes to annuity purchasing
- OMO changes
- Capital adequacy requirement changes
- Complaints to FOS about FSAs continue to decrease
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- Figure 10: Financial services firms complained about, by sector, 2006/07-2010/11
- The government and regulation are the biggest threats to the pension industry
- Changes to lifetime allowance
- Changes to the default retirement age
- End to compulsory retirement
- RDR remains a key regulatory influence
- Auto-enrolment set to commence in 2012
Broader Market Environment
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- Key points
- Economic recovery slow but steady… for now
- As the cost of living increases the ability to save is being eroded
- Living for longer means alternative retirement strategies are required
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- Figure 11: Cohort life expectancy at age 60, by gender, 1981-2060
- Increasing trend for people to work beyond retirement age
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- Figure 12: Breakdown in gross pensioner income (weekly average at 2009/10 prices), 1996/97-2009/10
- Volatility in the stockmarket is the only certainty for investors
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- Figure 13: FTSE 100 and FTSE All Share – daily index movements, November 2004-November 2011
- Uninspiring financial situation puts a strain on pension saving
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- Figure 14: Monthly changes in the rate of annual inflation* and Bank of England base rate – UK, October 2007-October 2011
SWOT Analysis
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- Figure 15: SWOT Analysis
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Who’s Innovating?
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- Key points
- New valuation tool for advisers launched by Nucleus
- Client feedback service from Sesame and Bankhall
- Openwork introduces segmentation tool to prepare for RDR
- Tenet also launches ‘Tenet Advantage’ platform for RDR readiness
The Intermediary Marketplace
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- Key points
- Number of directly authorised intermediaries steadily falling
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- Figure 16: Number of directly authorised retail intermediary firms, by sector (primary category), 2006-11
- Number of financial advice ARs and DA intermediary firms
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- Figure 17: Number of financial advice ARs and DA intermediary firms, by type, 2007-11
Distribution Overview
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- Key points
- IFAs rule the world of pension distribution
- IFAs are the primary distributors of new individual pension premiums
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- Figure 18: Proportional distribution of new individual pension APE* premiums, by distribution channel, 2006-11
- Pension annuity market slightly more diversified in terms of distribution
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- Figure 19: Proportional distribution of new pension annuity APE* premiums, by sales channel, 2006-11
- IFAs service the more wealthy client in the income drawdown market
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- Figure 20: Proportional distribution of new income drawdown APE* premiums, by sales channel, 2006-11
- 2011 sees IFAs take over 90% of the personal pension market
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- Figure 21: Proportional distribution of new personal pension APE* premiums, by distribution channel, 200611
- Similarly, IFAs also dominate the group pension market
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- Figure 22: Proportional distribution of new group personal pension APE* premiums, by distribution channel, 2006-11
- Single-tie and bancassurance play larger role in new individual stakeholder premium market
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- Figure 23: Proportional distribution of new individual stakeholder pension APE* premiums, by distribution channel, 2006-11
- IFAs are the main distributors of company sponsored stakeholder pensions
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- Figure 24: Proportional distribution of new company-sponsored stakeholder pension APE* premiums, by distribution channel, 2006-11
- SIPP distribution reliant on IFAs
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- Figure 25: Proportional distribution of new SIPP APE* premiums, by distribution channel, 2006-11
Market Size – Individual and Group Pensions
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- Key points
- GPP and company-sponsored stakeholder pension levels rise in 2011
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- Figure 26: New individual pension premiums, by product type, 2006-11
- SIPPs single premium transfer levels see significant growth in 2011
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- Figure 27: Single-premium transfer business, 2006-11
- Some increases in policy numbers and contributions for 2010
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- Figure 28: Total number of policies and regular premiums from individual pensions business in force, by pension type, 2004-10
Market Segmentation – by Type of Intermediary – Individual and Group Pensions
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- Key points
- Substantial increases in the total value of IFA sold premiums
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- Figure 29: Value of new premiums sold through independent intermediaries, by type of premium and pension, 2005-11
- Tied agents’ share of personal pension premiums sees large decline
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- Figure 30: Value of new premiums sold through single-tie agents, by type of premium and pension, 2005-11
- Value of GPP premiums sold through bancassurance sees marked increase
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- Figure 31: Value of new premiums sold through bancassurance, by type of premium and pension, 2005-11
- Non-intermediated share of company stakeholder pensions and SIPPs grows significantly in 2011
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- Figure 32: Value of non-intermediated new premiums, by type of premium and pension, 2005-11
Market Size – Annuities and Income Drawdown
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- Key points
- Annuity new business value increased slightly in 2011
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- Figure 33: Size of the pension annuities market versus the income drawdown market – new business, 2005-11
Market Segmentation – by Type of Intermediary – Annuities and Income Drawdown
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- Key points
- Value of new pension annuity premiums rises across most channels
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- Figure 34: Value of new pension annuity premiums, by sales channel, 2005-11
- Value of income drawdown business falls across all distribution channels in 2011
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- Figure 35: Value of new income drawdown premiums, by sales channel, 2005-11
Companies and Products
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- The Tenet Group
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- Figure 36: Key financial data for Tenet Group Ltd, 2009-10
- Honister Capital
- Sesame Bankhall Group
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- Figure 37: Key financial data for Sesame Bankhall Group Limited, 2009-10
- Positive Solutions (Financial Services)
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- Figure 38: Key financial data for Positive Solutions (Financial Services) Limited, 2009-10
- Alexander Forbes Financial Services
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- Figure 39: Key financial data for Alexander Forbes Services Limited, 2010-11
- Openwork
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- Figure 40: Key financial data for Openwork Limited, 2009-10
- The Oval Group
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- Figure 41: Key financial data for The Oval Group, 2009-10
Brand Communication and Promotion
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- Key points
- Independent financial advice adspend nearly doubles
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- Figure 42: Overview of total adspend on financial advice services, 2009-11*
- Totally Money has 32% of financial advice services advertising
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- Figure 43: Top ten advertisers of financial advice services, 2009-11
- Internet is the most popular medium for independent financial advice advertising
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- Figure 44: Overview of media type used to advertise financial advice services, 2011*
- Total intermediary directed adspend for pensions falls in 2011
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- Figure 45: Total intermediary-directed adspend, by product type, 2009-11
- Fidelity Investment Services is the biggest advertiser to the pension intermediary sector
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- Figure 46: Top ten advertisers to the pension intermediary sector, 2009-11
- Just Retirement and LV Group head up annuity intermediary advertising
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- Figure 47: Advertisers to the annuity intermediary sector, 2009-11
The IFA: Biggest Challenges Facing Pension Intermediaries
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- Key points
- The uncertainty in the economy is the biggest challenge for IFAs
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- Figure 48: Biggest challenges facing pension intermediaries, 2009-11
The IFA: Client Advice and Expectations
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- Key points
- Just under 50% of IFAs expect contribution levels to remain steady in 2012
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- Figure 49: IFA expectations of how current economic climate will impact new pension business, 2009-11
- Collective investments are the most recommended product
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- Figure 50: Where IFAs are recommending their clients invest their money, 2009-11
The IFA: Prospects and Future Business Intentions
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- Key points
- The RDR is not generating much positivity with IFAs
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- Figure 51: RDR impact on IFA business, December 2011
- The impact of auto-enrolment is thought to be negligible
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- Figure 52: Auto enrolment impact on IFA business, December 2011
- Shifting to focus to recurring income is top priority for IFAs in 2012
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- Figure 53: Key business intentions over next 12 months, December 2011
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