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Pensions - Intermediary Focus - UK - January 2013

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

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