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Navigating the Straits of Hormuz



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Henry Tapper, Ruston Smith, David Slater and Vincent Franklin discuss the ways we can support staff as they move from a workplace pension into a post retirement world

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Navigating the Straits of Hormuz

  1. 1. Working to deliver better member outcomes August 2019
  2. 2. Quietroom 5
  3. 3. Quietroom 3 They’re great at customer service
  4. 4. What AgeWage sets out to do To be independent thought leaders Provide clear and simple scoring Give clarity on retirement options
  5. 5. At the heart of our service is a bespoke algorithm, created by an advisory team of industry experts. The algorithm is fed by data on funds and contracts, measuring the value achieved and the money spent on each pot. The algorithm expresses the value for money of each pension pot in a single number. Clear scoring
  6. 6. Clarity on retirement options
  7. 7. Thought leadership – not everyone needs an IFA You want to wait and see You want drawdown but can manage it yourself You want a certain income that lasts as long as you do You want drawdown and want an IFA
  8. 8. You want drawdown and you want an IFA • Finding the right IFA(s) • Reward • Performance reviews • Staff/member feedback We need a DELEGATED MODEL OF ONGOING OVERSIGHT -Ruston Smith .
  10. 10. GUIDANCE AND ADVICE: • There are times during people’s lives when they need guidance or advice about their pensions • The FCA’s own research has called into question the appropriateness of the advice that some IFAs have provided on, for example, pension transfers • Being referred to the website doesn’t guarantee the right advice or the best experience COMPANIES AND TRUSTEES • Some Companies and Trustees have appointed or are considering the appointment of a small panel of IFA firms for their people – to provide some assurance that the firm that is chosen is a trusted one • A barrier to the appointment of an IFA firm is the risk that they may not remain suitable on an ongoing basis • Corporates and Trustees may have concerns about the future risk that the IFA firm they’ve appointed fails to deliver what’s required for members – with unintended consequences for both employees and the company / trustees • A proposition does not currently exist to meet this need – to monitor appointed IFA firms on an ongoing basis Everyday People – Financial Advice Challenges on Pensions
  11. 11. THE SOLUTION: • Where corporate sponsors and trustees don’t have the capability and capacity, they delegate to those that do • The solution is a delegated model of ongoing due diligence and monitoring • The service would provide independent ‘ongoing’ monitoring and due diligence of the IFA firms that have been appointed • Quarterly reporting to the corporate and/or trustee board – to provide transparency and robust governance • The ability to take proactive measures – and early resolutions of any concerns that are found GETTING THIS RIGHT • Widely consulted regulators, government department, ombudsman and industry leaders in this space • Listened to feedback and included suggestions to further strengthen the proposition • This is ‘work in progress’ but feedback, so far, has been very positive – but there’s more to do SOLUTION PROVIDER: • Capable, credible and unconflicted – with capacity • Market is being developed PROPOSED SOLUTION
  12. 12. Would include the following ‘independent’ checks in the following areas: THE IFA FIRM: • FCA registration and compliance • Change in ownership, business model or structural change – including extensions to the type of advice or service they offer • Financial position including surplus capital • Compliance with Statutory Requirements eg Companies House, FCA – and reporting of any sanctions or fines • Level of Professional Indemnity Insurance and direct accessibility to financial remediation PEOPLE: • Training requirements being met • People changes ADVICE AND SERVICE: • Appropriateness of the advice - by checking a fair representation of those that have had advice and the type of advice being given. Is the right advice being given? • Visibility on the type of advice, at the firmwide level, being appropriate – eg % recommended to transfer from DB • Clarity and Simplicity of the advice – by getting feedback from those who’ve had advice. Did they understand what they were being told so they could make the right choices? • Complaints by number and type – at the firm level • Appropriateness of the overall charging and approach on the end to end advice – ie downstream • Approach to ‘insistent clients’ and ‘contingent charging’ remains unchanged and appropriate PROPOSED PROPOSITION
  13. 13. We see c.105,000 words a day – Equal to 34GB when you add visuals from mobiles devices, TV LOW KNOWLEDGE Average mortgage holder at age 60 has mortgage debt of £90,000 CML Mortgage Survey 2016 DISTRACTED BY DEBT 1 in 20 adults have the literacy or numeracy levels of a 5 year old 19% of 55 to 65 year old’s have a literacy (26% numeracy) standard equivalent to GCSE grade D to G Supporting everyday people on decisions that will significantly influence their quality of life 1 in 5 don’t understand their bank statement Everyday People – Their Challenges, Our Challenges TOO MUCH INFORMATION LOW SAVINGS 40% of UK workers have less than £100 of savings TIME IS PRECIOUS Those with children only have 17 minutes to themselves each day
  14. 14. Key Messages 1. There’s a need for independent ‘ongoing’ due diligence and reporting for companies and trustees who have appointed an IFA firm or panel for their employees or members 2. Provides transparency, robust oversight and governance – on an ongoing basis – supplementing FCA supervision 3. Provides assurance that employees and members are receiving good, clear, simple and appropriate advice 4. Facilitates early remediation in areas where employees and members may not have received appropriate advice 5. Improves governance and reduces concerns by Companies and Trustees who consider appointing an IFA panel Supporting people in making the right choices – improving outcomes for retirement
  15. 15. You want drawdown but can manage it yourself • Help at hand • MAPS • Pension Dashboard • Choice architecture • Investment pathways
  16. 16. You want to wait and see • You have independent savings • You worry about long term care • You are hoping for innovation • You await inspiration (and CDC!)
  17. 17. You want a certain income that lasts as long as you do • Enhancements • Shape • Flexibility • Open market
  18. 18. Introducing the UK’s largest annuity intermediary
  19. 19. Pension freedoms The death of annuities? “No one will ever have to buy an annuity again”.
  20. 20. Did this spell the death of annuities?
  21. 21. 35,408 New annuity sales Retirement income - post pension freedoms Source: FCA’s latest data bulletin – 09/18 and data from LV= and Canada Life 101,000 New drawdown + UFPLS sales 33,975 New annuity sales but… 60% of new drawdown sales are zero income 46,697 Income drawdown + UFPLS sales 33,975 New annuity sales but… adjusting for 1,433 fixed term annuity sales (classified as drawdown)... 45,264 Income drawdown + UFPLS sales
  22. 22. FTSE 100 6,930 3,436 - 50.4% 6,730 3,512 - 47.8% 7,103 5,536 - 22%
  23. 23. Individually personalised underwritten annuity quotations Enhanced annuities Annuity quotations based on personal medical and lifestyle information: Over 80% of Retirement Line enquirers qualify for an enhanced annuity vs. the national average of circa 60% Occupation Postcode Alcohol intakeBMI Smoking High blood pressure High cholesterolLiving status In 2018, over 57% of all our sales were enhanced annuities
  24. 24. The secret to our enhanced annuity success Regular medical underwriting training Our own bespoke health form and method of data gathering
  25. 25. Enhanced Annuities - medical conditions and potential enhancements Medical/lifestyle condition Percentage Increase Additional annual income Total annual income Annuity rate Smoker 12.06% £603 £5,603 5.9% Heart Attack 47.96% £2,398 £7,398 7.9% Diabetes 54.44% £2,722 £7,722 8.2% Chronic obstructive pulmonary disease (COPD) 69.22% £3,461 £8,461 9.0% Alzheimers 145.86% £7,293 £12,293 13.1% Source: all enhanced quotes from Retirement Line’s portal for April 2019 Below figures based on an annuitant aged 65 with clean bill of health and standard annuity payment of £5,000pa
  26. 26. £4,500 a year x 5 years + £55,527 GMA Regular income for set term with/without Guaranteed Maturity Amount (GMA) Withdrawals can be spread during set term to minimise or avoid tax GMA is without investment risk – can be reinvested at maturity under pension freedoms Can take tax-free cash without taking any income Potential for higher income at end of term if future annuity rates increase or health deteriorates Choice of cost-effective lump sum death benefits Can transfer out at any time for any reason: eg onset of poor health could qualify for an enhanced annuity What are they? Fixed term annuities £100,000 fund - £25,000 tax-free cash = £75,000 into the annuity £78,027= Example: Fixed term annuity over 5 years YTD, over 40% of all our sales are fixed term annuities
  27. 27. Annuity sales post pension freedoms – some concerns 57% of annuity sales to existing customers (source: FCA Data Bulletin - 09/18) 39% - 48% of consumers who bought a standard annuity from their existing provider may have been eligible to buy an enhanced annuity (source: FCA PS 19/1 - 01/19) 70% of over 55’s unaware of enhanced annuities (source: Hargreaves Lansdown - 2019) 76% of over 55’s believe disclosing medical conditions decreases their annuity rate (source: Legal & General 2018)
  28. 28. Enhanced annuities – provider bias
  29. 29. Pension freedoms Perhaps, this would have been more suitable.. “No one will ever have to buy a POOR annuity again”.
  30. 30. Who are Retirement Line?
  31. 31. Retirement Line – our achievements Largest introducer of enhanced annuities to Just Group, UK’s leading enhanced annuity provider Largest introducer of fixed term annuities to Canada Life (2016 - 2018) Consistently top or second largest introducer of fixed term annuities to LV= (2016 - 2018) 9.9 score out of 10 on Trustpilot - over 1,100 reviews Appointed annuity broker to BestInvest Appointed annuity broker to Wesleyan Assurance Complaints record – only 38 complaints since 2013 whilst arranging circa 20,000 annuities Since 2018, UK’s largest annuity intermediary by far
  32. 32. Retirement Line UK’s Number 1 annuity intermediary Period Total number of annuities arranged Total funds transferred 2018 2,924 23% higher than 2nd placed firm (MPE) £161,000,000 30% higher than 2nd placed firm (LV=) Q1 2019 766 20% higher than 2nd placed firm (HUB) £46,000,000 50% higher than 2nd placed firm (HUB)
  33. 33. Culture – what the FCA expects Our culture: we desire all our staff to enjoy working for us Family-owned business Negligible staff turnover Expert and contented staff means happy and satisfied customers Satisfied customers means successful business Our staff recognise that our customers are of paramount importance to the success of our business Andrew Bailey, Chief Executive, FCA (July 2019) "Culture continues to be an issue of the highest importance for the FCA. It is a central consideration for our supervisors, who look at drivers of behaviour, staff incentives and governance arrangements in their day-to- day interactions with firms.“
  34. 34. Annuity partner to Wesleyan Assurance Society What we give Wesleyan Award-winning service from an authorised and regulated firm (FCA reference 726601) Tailored Service Level Agreement Data security Pension scam protection 100% call recording and monitoring Monthly MI and sales results Peace of mind that their regulatory obligations are being met
  35. 35. Annuity partner to Wesleyan Assurance Society Instant best guaranteed open market annuity quotes from our own portal All paperwork completed by expert RL staff Online ‘paperless’ journey Weekly progress report by email or telephone First-class customer service designed to avoid stress No fees nor obligations – we only receive an upfront commission payment if a customer proceeds (no ongoing fees) Single sales and admin point of contact Unlimited annuity quotes and detailed information enabling informed choices What we give Wesleyan customers
  36. 36. Wesleyan tribute Appointed exclusive annuity parter to Wesleyan Assurance Society Retirement Line have their customers' very best interests at the heart of all they do and their front-line team of experienced annuity specialists offer a fabulous empathetic and patient service. As we inform our customers on our website: "Our customers are in safe hands with Retirement Line. Known as 'the best annuity broker on the market'.” David Nottingham Head of Product Development & Performance 8th March 2019
  37. 37. How we can help your members
  38. 38. Thank You Any questions?

Editor's Notes

  • This slide is self-explanatory - read out the example increases and confirm they are actual rates extracted from our portal.

    Interestingly, the increase for Alzheimers is very significant so many elderly people can benefit from this. We have two dedicated annuity specialists who are “dementure friendly” in arranging annuities for people with dementia.
  • Standard Life fined £30m for mis-selling annuities
    Prudential/FCA agreed £400m provision
  • Deciding on the right choice of annuity coupled with securing the highest level of income is one of the most important decisions facing annuitants.

    There is no room to make a mistake since once purchased, an annuity is irreversible.

    Many retirees are not particularly financially savvy and can find this a very tressful experience faced with having to decide how to invest possibly the largest amount they have had to consider in later life.. Our service has been designed to overcome their anxieties by offering our helpful and knowledgeable service with care and empathy and to to hold their hands through this long and often complicated journey.

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