With every area of their marketplace being disrupted, British life & pensions providers have an overriding priority: ensuring an in-depth understanding of each consumer segment. This will allow them to identify where long-term value can be generated in each one, and to develop the capabilities to achieve this goal. This report examines the most important disruptive forces affecting L&P carriers, and the business models that can be adopted to capitalize on this disruption and build value for the long term.

1. Life, Pensions, and Investments:
What do you want to be famous for?
Becoming the progressive
provider of the future

2. 2

3. 3
The UK LP&I marketplace is ripe for change.
Digital has arrived, and it’s changing
everything, empowering consumers,
reshaping their behaviours and presenting
opportunities for providers to build new,
longer-lasting customer relationships.
Driven by the increasing waves of
regulation the market is fragmenting.
We’re seeing new players emerging and
staking their claim to core segments of
the traditional LP&I value chain.
With every area of their marketplace
being disrupted, providers are reassessing
distribution arrangements, changing product
propositions and targeting operational
excellence across their operations. These
are all core priorities, but they come second
place to what must be the overriding
objective from now on – ensuring an
in-depth understanding of each consumer
journeys and expectations, identifying
where long-term value can be generated in
each one, and developing the capabilities
that will be needed to achieve this goal.
LP&I providers that fail to address this
priority will risk being sidelined as ‘financial
utilities’ and/or becoming increasingly
disconnected from customer needs (and
being perceived as slow to react to fast-
changing shifts in the marketplace).
To help them navigate their journeys
towards becoming the ‘progressive
providers of the future’, we’ve used this
study to identify what we believe to be
the key forces of disruption in the LP&I
market over the next 10 years – as well as
the business models that can be adopted
to seize opportunity from these ‘disrupters’
and build value for the long term.
What do you
want to be
famous for?
Executive summary

4. 4
Driven mainly by government reforms
to the pensions industry, there’s been a
significant drop in investor premium over
the past 12 months. Figure 1 highlights
this trend, showing a 5 per cent drop in
the UK average in March 2014, coinciding
with the UK Budget announcements of
pensions reforms, and a 12 per cent drop
during July and August, when further
announcements of reforms to annuities
were made.
Clearly, investor confidence has declined
and expectations for the future value
of LP&I companies have now been reset
at a lower level. It’s apparent that while
they remain positive about short-term
prospects for the industry, investors are
less certain about where providers are
headed in the long term.
While they are setting off from
a different position and with a different
dynamic, LP&I providers are all facing
a future that will be reshaped and driven
by a number of common trends. To rebuild
confidence in their operations as sustainable
businesses, it’s essential for each one of
them to demonstrate exactly how they
plan to build value for the long term.
Investors’ reduced expectations of
future performance are the result of
a steady erosion of the traditional
LP&I business model. Each time a new
regulatory announcement is made, every
stage of the LP&I value chain is affected –
from fund management, front- and back-
office processing and marketing through
to distribution.
Of course, while it is a key influence,
regulation is far from being the only
driver of change. The LP&I landscape
is also being transformed by a range
of other factors. Shifting customer
expectations and behaviours are
driving providers to rethink customer
segmentation, the arrival of new
competitors recalibrates the market
dynamic, and changing revenue streams
and evolving cost structures impact
established business models.
Marketing, CRM and distribution must
adapt to a new demographic, with longer
life expectancies and improvements
in long-term health combining with
increased spending on retirement and
limited awareness of what LP&I providers
have to offer. At a high level, customers
do not trust the industry, nor do they find
providers easy to deal with. Accenture
research shows that the insurance
industry currently ranks below many other
sectors on both of those issues1
. Indeed,
our study found more consumers agree
that banks are trustworthy and easy to
deal with. This explains, at least in part,
the high level of consumer disengagement
with LP&I providers. Having remained
stagnant over the years, barely shifting
since our 2011 survey, customer
satisfaction and recommendation levels
are now lower for LP&I than for any
other financial services sector2
.
Along with this continuing evidence of
disengagement and cynicism, customers
are becoming increasingly dissatisfied as
providers fail to meet their expectations
across a number of vital areas – from
the clarity and simplicity of products to
digital servicing capabilities3
. Crucially
too, the use of channels is in flux. This
is partly because old advisor models
have been transformed by the Retail
Distribution Review (RDR), which resulted
in a significant decrease in IFA numbers
and a decline in Bancassurance as a
proportion of new business. At the same
time, weak customer relationships are
giving increasing cause for concern: some
70 per cent of LP&I customers say they
have had no contact with their provider
in the past 12 months4
.
Auto-enrolment means that new front-
and back-office processes and services
are needed, creating additional costs
for employers and LP&I providers. Some
companies have already achieved success
in this area. L&G, for example, has enrolled
over 500,000 new members into company
schemes since staging started in 2013 (due,
in large part, to early staging dates, along
with automated and straight-through
processing of auto enrolment processes).
More widely, lessons can be learned from
the Australian experience which underlined
the importance of providing automated
offerings that can deliver relevant solutions
at acceptable price points.
Introduction: Making the
case for change
While UK LP&I providers have lived with near-constant change for the
past 30 years, we believe an inflection point has now been reached.

5. 0.65
0.70
0.75
0.80
0.85
0.90
0.95
1.00
1.05
1.10
1.15
1.20
1.25
L&G - 1.01
Aviva - 0.98
Standard Life - 1.10
Friends Life - 0.70
Prudential - 0.91
Evolution of Price to Tangible Book Value, 2014
Rebased, 1 Jan to 22 Oct
22nd March
UK Budget
5% Drop on UK Ave.
1 Jan 1 Feb 1 Mar 1 Apr 1 May 1 Jun 1 Jul 1 Aug 1 Sep 1 Oct 1 Nov
12% Drop on UK Ave.
July - August
Further
annuities reform
announcements
5
Figure 1: Decline in LP&I investor premium
Every area of the value chain is under
pressure from asymmetric growth in the
industry, with new platform providers
expanding their asset base and new
market entrants hitting the UK stage.
Changing revenue streams are a fact
of life too, with the UK’s contribution
to global premiums in decline, annuity
sales collapsing and savings near
historic lows. And, of course, diminished
profits and increasing administrative
costs present persistent and continual
challenges to existing business models.
1
Accenture’s 2014 UK Financial Services
Customer Survey: UK Life & Pensions:
Winning the race for relevance with
insurance customers.
2
ibid.
3
Accenture’s 2014 UK Financial Services
Customer Survey: UK Life & Pensions:
Winning the race for relevance with
insurance customers.
4
Accenture’s 2014 UK Financial Services
Customer Survey: UK Life & Pensions:
Winning the race for relevance with
insurance customers.

6. 6
Challenges with current business models by value chain component
Changes to customer segments
• Health improving: Health of pensioners flat in 20 year period
• But retirement more costly: Spending on retirement grown at 8%
• And limited awareness: 55% of L&P customers have never
sought advice
Fund Management Front Office Processing Back Office Processing Marketing / CRM Distribution
Opportunities and threats from partners
• Asymmetric growth; Growth of new platform providers; e.g. Hargreaves have grown asset base to c.£500bn (est.) by 2015 (vs. £40bn in 2001)
• New entrants’ BlackRock intend to start offering US products such as LifePath
Evolving cost structures
• Persistent cost pressures: Operating Profit / NPE from 63.8% to 61.5% from 2008 – 2012
• Increase of Admin Costs: As a / NPE of 10% CAGR from 2008 – 2012 due to expense of managing legacy positions
Changing revenue streams
• Shrinking place on the global stage: UK contribution to Global Premiums declined 10.1% CAGR from 2007 – 2012
• Annuity sales collapse; for some, 2014 Q3 quarter-on-quarter sales down 50% and down 75% year-on-year
• Savings are near historic lows: households only save around 4.8% of their incomes with less being held in cash savings than in the past
• Over-reliance on volatile investment income: 4.4% contribution to income growth from 2003 – 12)
Evolving relationship with customers
• Distribution models changing: Integrated distribution
sales force numbers are down 18% CAGR
• Consumers not engaged; 40% of customers thinking
L&P are too complicated and confusing
Use of channels
•Old adviser models disrupted; Bancassurance
dropped from 11.7% of new business to 5.1% as
a result of RDR
•Weak customer relationships; 70% of L&P customers
have had no contact with provider in last 12 months
Changing activities
•New processes and services needed;
Auto-enrolment has created an additional cost for
both employers and L&P providers through having
to set up new services (e.g. Aviva Auto-enrolment
Planner / Modeller)
Figure 2: Challenges across the LP&I value chain
Highlighted in Figure 2, these various
factors are placing enormous stress on
the entire LP&I value chain. With this in
mind, it’s clear that incremental change
programmes are no longer enough.
Instead, the time for bold and decisive
change has arrived. For organisations
that show themselves willing to step
up and seize the initiative, the scale
of opportunity is enormous.
We believe that providers must take
action now – first by deciding exactly
what they want to be famous for
in the new LP&I marketplace, and
then by identifying the new business
model that will position them as the
progressive LP&I provider of the future.
To help providers map out this journey,
we’ve identified what we believe to
be the principal sources of disruption
for the industry from now on, before
identifying the new business models
that we believe will emerge to respond
to these ‘market disrupters’.

7. 7

8. 8
1. Intensifying
and unpredictable
regulation
We’ve already seen the effect that
regulatory change has had on the
traditional LP&I business model. This
trend is set to continue, or even intensify
from now on. The impact of some of this
legislation is predictable. MiFID II, CASS
5 (Client Assets Sourcebook), Solvency
II, the RDR and AIFMD (the Alternative
Investments Fund Managers Directive),
for example, are already squarely on the
map. However, unpredictability is a strong
feature of the regulatory landscape.
Further pensions reform in the run-up
to the 2015 general election cannot be
ruled out and, looking further ahead, LP&I
providers need to be prepared for more
unexpected announcements.
There’s no doubt that regulatory
intervention is set to dominate the thinking
of LP&I providers for the long term.
As an indicator of possible future
regulatory initiatives in the UK, Australia
could provide some useful pointers. Much
of the pensions regulation introduced
there more than 20 years ago is still
playing out today (by contrast, government
intervention in the UK industry has only
started to gather momentum in the past
few years). As a result, by 2026, the
Australian superannuation (pensions)
industry will look very different from
how it does today. Total funds under
management are forecast to rise from
A$1.5 trillion to A$3.3 trillion, and it’s
expected that more assets will be held by
retired individuals demanding a broader
relationship with their fund.
As the Australian government has focused
on radically reshaping the pensions sector,
the number of funds and accounts has
consolidated, and the population has
moved from accumulation to retirement.
Competition between funds has grown
significantly and consumers have become
much more demanding and eager for
advice. At present, the private pension
system is faced with the possibility of far-
reaching reforms following publication of
the highly critical report by the Murray
inquiry (into accusations that high fees
charged by pension fund managers are
forcing millions into poorer retirement)5
.
According to the inquiry (which was
set to make policy recommendations
to the Australian government by the
end of November 2014), significant
improvements in retirement incomes
could be realised by reducing the costs
of the country’s superannuation funds.
Potential savings of A$7 billion per year
have been identified from the industry’s
total annual running costs of A$20 billion.
More broadly, pervasive digital interaction
and social media usage are likely to drive
further regulatory intervention in the UK,
especially in the areas of data protection
and privacy, and data security. The risk of
penalties for non-compliance is already
high. Looking ahead, providers will need
to respond by enabling faster product
development cycles and increased agility
across their operations.
2. Digital is here
and now
Already the norm in most other industries,
digital is fast becoming a ‘hygiene
factor’ for the LP&I industry. Customers
increasingly expect and demand strong
digital capabilities from their providers,
and these demands must be met.
Driven by the significant investments
made by retail banks in their digital
offerings, consumers of all ages have
grown accustomed to managing their
finances online. LP&I providers need
to keep pace with these developments,
transforming their largely self-service
online offerings to enable digital
relationships that can drive lifetime
customer value.
The rapid rise of digital is reshaping
customer behaviours and expectations
and presenting providers (and their
emerging competitors) with new
opportunities for forging richer customer
relationships based on more regular
contact and personalised services and
offerings. Customers expect round-the-
clock digital relationships – at home, at
work and on the move. The priority (and
challenge) for providers is to master the
complexity of integrated multi-channel
distribution spanning customers and
distribution partners across all digital
and physical touchpoints.
Crucially too, digital is no longer the
preserve of the younger generation.
In fact, the fastest-growing group of
online users is women aged 40 to 60.
Spotlight on disruption…
the LP&I landscape in flux
Based on Accenture analysis and our in-depth experience of the LP&I industry,
we’ve identified six key market disrupters that we believe will transform the
industry landscape over the next 10 years:

9. 9
Providers need digital to appeal to all
of their customers and should focus on
designing highly usable digital offerings
that meet the requirements of every age
group. As they do so, other trends must
be taken into account. Social media is no
fad. Emphatically here to stay, it presents
opportunities for providers to enhance
and strengthen their relationships with
consumers. And with the desire for
personalisation and relevance on the rise,
providers can respond by using smart
location technology to develop location-
based loyalty and reward schemes.
The bottom line? Far from being an add-
on option, digital is becoming integral to
the entire customer journey.
3. The changing
consumer
Empowered and emboldened by digital, a
new breed of customer is emerging, driven
by the belief that there are better deals on
offer, and better ways of making savings
and investment products work for them
at different stages in their life journeys.
Customers are becoming less brand
loyal, more price savvy and increasingly
comfortable buying products through
digital and/or non-traditional players.
What’s driving these new behaviours?
Along with technology innovation, we’re
seeing increasing competition from other
market segments (e.g. retailers including
Marks & Spencer, Sainsbury’s and Tesco)
and declining trust in traditional financial
services providers.
Accenture research shows that 71 per
cent of consumers are now willing to
purchase insurance via digital channels.
67 per cent of them would be interested
in being offered insurance via their
mobile devices. And 48 per cent regard
product advice on social media as
‘important’ or ‘very important’. Figure 3
highlights the core qualities of this new
generation of customers:
The overriding priority for providers is
to understand these new types of
customers, get to know them, and
recognise their value. Using digital
technologies, including advanced
segmentation, analytics, social and
mobile, leading firms will gain the insights
they need to optimise customer value at
every stage of the relationship. As well
as gaining a much richer understanding
of existing customers (and their lifetime
value), these firms will take steps to
capture a share of the massively under-
served youth market segment, and engage
with it at an early stage through simple,
attractive and relevant products and
services that establish trust and generate
dialogue. Once this segment has been
successfully engaged, these leading firms
will focus on staying with them, helping
them to navigate through their life
journeys by supplying the right products,
to the right people, at the right time.
Having established links with co-
providers, and developed simpler, more
compelling propositions, expect to see
these leading firms can be expected to
engage with customers from a younger,
pre-university age. In-demand services
will include advice on what living the life
they want will cost and how to go about
making it happen. This need for guidance
will continue throughout the customer
journey. Driven by digital, consumers will
demand access to real-time information
on what they should be doing with their
finances. They’ll expect products taken
out in their teens or twenties to grow
with them and incorporate features that
evolve based on life events, financial
factors, future plans and risk appetite.
5
See ‘Australian pension body fights
40% fee cut’, Financial Times, 26 October
2014 (www.ft.com/cms/s/0/21f6b770-
5548-11e4-b750-00144feab7de.
html?siteedition=uk#axzz3JJb4YZPZ)
Figure 3: Understanding the emerging digitally-enabled LP&I customer*
Better savers:
• Saving, and saving more, across a wider
range of savings vehicles: (Only 11% of
digital customers are not saving vs. 27% of
non-digital customers, and 30% are saving
>£3,000 a year vs 24%)
Advice seekers:
• Hungry for information and advice on
long-term financial planning. (Twice as
many digital customers want information
and advice in comparison to non-digital
customers: 68% vs. 33%)
Relationship seekers:
• Digitally savvy but also keen for human
interaction; with similar levels of desire for
in-person financial planning as the wider
population (71% of digital customers vs.
75% of non-digital customers)
• More interested in financial planing over
the phone (63% vs. 42%)
• Open to regular services and tips from LP&I
providers (33% vs. 22%)
More vocal:
• Advocators: Over 4 times as likely to
recommend their insurer (38% of digital
customers vs. 9% of non-digital customers
recommended in the last 12 months)
• Complainers: But far more likely to complain
about their providers too (18% vs. 3%)
More open to alternative channels
and products:
• More likely to consider buying LP&I from
non-traditional channels such as PCW,
retailers, Internet giants and online
financial-planning tools
• More open to differentiated LP&I customer
propositions**
More relaxed about the use of their
personal data, everyday behaviour
and preferences for targeted offerings
* Defined as customers who have had some
form of digital interaction with their LP&I
provider (across researching, purchasing and
servicing) over the last 12 months. They are
typically more weighted towards the younger
and wealthier demographics.
** Our survey tested consumers’ level of interest
in differentiated propositions, including loyalty
programmes offering a range of insurance and
non-insurance services, digital self-direction,
holistic long-term insurance and retirement
provision, and healthy rewards via
fitness-tracking.
Digital LP&I customers are:

10. 10
4. Re-emergence
of the workplace
By 2025, expect to see the workplace
re-established as a key marketplace –
and employers recognised as key
consumers in their own right. Until
now, the retraction of defined benefit
schemes has seen workplace pensions
declining in significance. No longer.
Due to auto-enrolment, as well as
recent and ongoing pension reforms,
and employers seeking to motivate/
retain employees, the provision of
pension schemes for employers is set
to be a priority growth area.
From now on, we expect to see a
number of mega-trends in the UK
combining to position the workplace
as the gateway to the mass market:
• The economy – strained household
incomes in a low-growth environment,
a shortfall in retirement, and inadequate
levels of financial literacy will combine
with employers seeking new ways to
attract and retain talent to drive uptake
in workplace pensions
• Distribution channels – closure of
advisory arms in high street banks and/
or the high cost of obtaining advice will
limit the availability of mass market
advice; at the same time, providers
will be attracted towards lower-cost
distribution models, and IFAs will be
driven to explore advice opportunities
beyond the mass market in order to
build recurring revenue streams
• Consumers – lack of trust in financial
services institutions and the desire for
ease of access to financial information
(if possible, from a single source) will
add to the importance of the workplace
as a key channel
• Digital – consumers’ increasing
confidence in technology to self-serve in
research, advice and policy management
will give employers a strong hand in
providing easily administered workplace
pension solutions
• Regulation – increased engagement
from the regulators in workplace
pensions reforms (e.g. auto enrolment
and NESTs) will continue to drive the
resurgence of the workplace channel.
The onus will be on providers to offer a
compelling workplace proposition above
and beyond a workplace pension. Various
opportunities will arise. Employers will
need education in the value of workplace
schemes; add-on services will win loyalty,
from aggregate bicycle schemes, to gym
membership and linked discounts; and
more focus will be needed on the savings
benefits provided by collective purchasing
of savings, investments and other
financial products.
Employee benefits platforms will
have an essential role to play. And
while this market is still in the early
stages of development, with few ‘full’
platforms available, some initiatives
have already scored notable successes
in this area. BenPal, JLT’s international
online employee benefits management
system, is one of them6
. Now deployed
in 12 countries and used by over 150
companies to securely communicate
employee benefits to over 300,000
employees, BenPal is designed to provide
users with 24/7 control of their benefits.
Bringing together benefits information in
one place, the system makes it easy for
employers and employees to see accurate
information about benefits at any time.
Extremely flexible, it can also be used
to communicate and administer total
reward statements, fixed, voluntary and/
or flexible style employee benefits.
5. Fierce
competition
Traditional LPI providers are already
under attack from non-core adjacent
competitors (e.g. Hargreaves Lansdown
becoming a major product provider in its
own right), as well as from non-standard
customer-focused competitors such as
Tesco and Sainsbury’s. Looking ahead, as
the pace of change accelerates, expect
to see disruptive new competition from
online platforms like Amazon and Google.
Competition from now on will only become
more fierce. Increasing disintermediation
of providers by asset managers,
distributors and new platforms will
intensify pressure right across the LPI
value chain. As customer relationships
are identified as a major source of value,
traditional distinctions between players
in this marketplace will begin to dissolve.
Forthcoming regulation is set to further
blur value chain boundaries and allow
non-core competition to stake a claim
to a slice of the profits.
Figure 4: The new LPI ecosystem – putting the customer front and centre
CONTINUOUS
MONITORING
EVERYWHERE
24/7
COMMUNITIES
PERSONALISATION
CUSTOMER
CENTRICIT Y
My Data
LIFEST YLE
COLL ABORATION
CONTINUOUUSS
MONITORIOR NNGG
SOCIAL
HE ALTH RISK
CONTINUOUS
Insurers
Digital

11. 11
Competitive positioning will fall to
manufacturers with superior product
design capabilities who can respond
rapidly to changing market demands, as
well as to product providers, distributors,
platforms and new brands that do not
even exist today. These new disrupters
will drastically change the competitive
dynamics of the future LPI marketplace
through their ability to establish
long-term, active relationships with
customers. Some examples of what
traditional players would call ‘disruption’
(and new players would call ‘progress’)
already exist. These include ‘Nutmeg’,
an online investment manager, ‘Wealth
Wizards’, an algorithm-based approach
for retirement planning advice and
‘Money on Toast’, which offers regulated
simple financial advice across a wide
range of investment, pension, mortgage
and insurance products, alongside low-
cost online trading.
6. Aggregation
Customers currently expect to have
a single view of their products with
any given provider, regardless of the
channel through which the product
was sold. As technology progresses,
so the expectations will increase.
Soon, customers will demand to see a
single holistic view of their holdings,
irrespective of channel or provider. The
priority will be to obtain a consolidated
view of total net value. Although
technically relatively easy to achieve,
this crosses boundaries that channel
owners are not yet willing to break
down. In the future, however, instead
of seeing themselves as ‘owners’ of
the customer, the mindset will need to
change. Providers will have to shift from
conducting transactional ‘conversations’
with customers to putting them at the
centre of the ecosystem – and then
deciding where they want to play
within it (see Figure 4).
In this new world, where customers
decide who has access to their data
at each point in the lifecycle, provider
models will have to change. Some may
choose to operate as ‘open providers’,
sharing a common framework and a
common set of product data that can
be used to aggregate a customer’s
holdings into a single view. Others may
opt for ‘basic open aggregation’, with
one provider provisioning a secure and
anonymous vault that accepts user IDs
and passwords from other providers so
that aggregation can happen in real time
with no storing of aggregated data. And
others may choose to position themselves
as an ‘aggregation service’, aggregating
data but not manufacturing products.
The six market disrupters we’ve identified
in this section are set to transform
the LPI marketplace. And in various
combinations, we believe that they will
drive the emergence of new business
models that the ‘progressive providers
of the future’ will adopt to secure long-
term success. The relationship between
each new business model and the key
disrupters we’ve already identified is
shown in Figure 5.
6
www.benpal.com
BETTER
OUTCOMES
RISK ASSESSMENT
CAPITAL
MANAGEMENT
PREFERRED
DIGITAL
PLATFORMS
INSIGHT-DRIVEN
ACTIONS
INSIGHT
ACTION
INDUSTRY
BEHAVIOUR
PARTNERSHIPS
VALUE ADDED
SERVICES
PARTNERSHIPS
OPTIMISED
SUPPLY CHAIN
SUPERIOR
SERVICE
“PROTECT ME”
INNOVATION
GOVERNMENT

12. 12
Customer
centric
business model
Summary Key disruptive drivers Implication for providers
Regulatory
challenges
Digital
disruption
Changing
Consumer
Re-
emergence
of workplace
Fierce
Competition
Demand for
aggregation
Mass Market
Hero
• Emergence of the
mass market winner
• The provider who
can fill the mass
market gap
• Needs to successfully
balance a simple online
proposition with clarity
of guidance versus low
cost advice (e.g. through
digital means)
• Engages Mass Market
customers on saving for
the long term
Alliance
Provider
• Manufactures own
niche products
• Distributes others
niche products
• Seeks to position
itself as the one
size fits all solution
provider
• Seen as the
waterfront provider
of the future
• Strong in product
manufacturing
• Has well established
partnerships which
intermediate it with the
right customer groups
• Strong and varied
distribution capabilities
Asset
Aggregator
• The core industry
platform provider
• Equivalent to a
utilities company
as not economically
sensible to have
multiple providers
Requires:
• Market leading, scalable
and future proof
architecture
• Ease of ability to plug
into different competitors
systems and existing
platforms
• Offers range of channels
to access the platform
e.g. end client, via adviser,
via bank
• Ability to bolt on market
leading front end financial
planning tools
• Offers compelling
and simple to migrate
proposition for provider’s
back book
Figure 5: New customer centric business models driven by key disrupters

13. 13
Customer
centric
business model
Summary Key disruptive drivers Implication for providers
Regulatory
challenges
Digital
disruption
Changing
Consumer
Re-
emergence of
workplace
Fierce
Competition
Demand for
aggregation
Niche
Provider
• Specialist providers
focusing on specific
components of
the value chain
or niche product
areas e.g. specialist
fund management,
equity release,
crowd funding
investments
• Has a market leading
proposition in a core
sub-segment
• Has broad access to the
key customer segments
that demand that product
• Partners with / acquires
to establish capabilities
where the company does
not have strength
• Fosters / has a culture
of innovation
Customer
Specialist
• Emergence of one
potential customer
insight and
information expert
• Partnerships with all key
data providers e.g. banks,
social media, retailers,
supermarkets
• Ability for the customer
to select / de-select which
areas data to share
• Market leading analytics
capabilities
• Comprehensive rewards
system in place to
incentivise sharing of data
Outsider • Emergence of new
competition from
non-traditional
players e.g. Google
• A provider who
is adept at
understanding
and accessing the
’contemporary
customer’ in a way
that incumbent LPI
players haven’t
• Multiple implications and
requirements in being
adept at understanding and
accessing the customer
e.g. strong in digital
marketing, search engines
and social networks
• Could have the
characteristics of the
mass market hero or the
customer specialist

14. 14
Welcome to the era of digital agility…
bringing bad news for traditional
‘waterfront’ players.
Driven by the disruptive trends identified
in the previous section, we predict that
six new business models (introduced
in Figure 5) will evolve as existing, and
new, providers respond to the challenges
of the new LPI landscape. Shown in
focus in Figure 6, these models, the
factors driving them and the areas of the
value chain where they will play out are
discussed below:
1. Mass-market hero
There will still be a role (and a robust
value proposition) for providers that
can fill the ‘mass-market gap’. Since the
RDR’s introduction, retail banks have
concentrated their efforts on chasing
business in the mass-affluent segment
of the market where customers have
the depth of resources needed to
warrant a regular financial review. As
a result, the mass-market segment has
been left wide open.
With business models focused on the
marketing and distribution components
of the value chain, winning providers
will successfully balance simple online
propositions offering clear guidance with
the ability to proactively provide low-
cost advice through digital channels. The
objective will be to engage mass-market
customers in saving for the long term.
Winning in the new LPI
landscape…selecting the right
customer centric business model
The outsider could
potentially provide
this role based on
their core capabilities
The Niche
Provider
The Mass
Market Hero
The Customer
Specialist
The Alliance
Provider
The Pure Asset
Aggregator
The Outsider
Figure 6: New customer centric business models
By 2025, we can expect to see business models focusing more closely on
specific components of the LPI value chain, with more providers moving
to maximise value from increasingly niche product and customer segments.

15. 15
2. Alliance provider
Taking advantage of an increasingly
fragmented LPI marketplace, alliance
builders seek to position themselves as
the ‘one size fits all’ solution provider.
Manufacturing their own niche products,
as well as distributing niche offerings
from other providers, these players
will have proven strengths in product
manufacturing, alongside well-established
partnerships that intermediate them
with the right customer groups.
Just as HSBC successfully combined
strong and varied distribution capabilities
with the ability to manufacture some of
its own products and underwrite risk, so
other players with similar resources will
seek to step into this space and position
themselves as the waterfront providers
of the future.
3. Asset aggregator
Ongoing digital innovation and changing
consumer behaviours will drive the
emergence of this business model.
Operating as the core industry platform
provider, the asset aggregator will play
a key role in the new LPI marketplace
by bringing together all provider
propositions in one place.
With consumers increasingly demanding
to see a single holistic view of their
holdings in one place, irrespective of
channel or provider, this function is
aligned with the true customer-centricity
that will differentiate leading providers
from now on. Customers with multiple
pension pots from various employers/
providers will be able to log into the
asset aggregator’s platform and obtain
a single holistic view of their aggregated
financial information.
Of course, the challenge here is that
this is an ‘all or nothing’ model. For it
to succeed, all LPI providers need to
trust the platform and be willing to share
their information through it. To secure
this trust, asset aggregators will need
market-leading, scalable, secure and
future-proof technology architectures
that can easily plug into competitors’
systems and existing platforms. With a
range of channels available for accessing
the platform (e.g. end-client, via adviser,
via bank), the platform will also offer the
ability to bolt on market-leading front-
end financial planning tools (and tailor
these to the distributor’s own brand).
4. Niche provider
These specialist providers will focus on
specific components of the value chain
or niche product areas where they can
develop and sustain a market-leading
value proposition (e.g. specialist fund
management, equity release or crowd-
funding investments). Happy to operate
in discrete segments, they will be ready
to collaborate as needed to develop the
bolt-on capabilities they need.
With the large-scale, traditional
providers increasingly likely to play
it safe, expect to see new product
innovation being driven by this business
model. The providers that select this
approach will have broad access to
the key customer segments demanding
their products – they may already exist,
or they may emerge as true market
disrupters from now on. Potential
candidates for this role could include
specialist providers of lifestyle financial
products (such as Just Retirement), or
online platforms that have yet to target
consumer finance business.
5. Customer specialist
Driven by ongoing digital disruption
and changing consumer behaviours, this
business model sees the emergence of
a single ‘customer specialist’ that can
position itself as the ‘go to’ repository of
customer data. By forging partnerships
with all key data providers (e.g. banks,
social media, supermarkets), this
provider would give customers the
ability to select/de-select which areas
of their data should be made available
to LPI providers. Offering market-
leading analytics capabilities, including
propensity analysis, fraud analysis and
flexible micro-segmentation techniques,
this platform would serve as a secure
source of data to which LPI providers
could be given secure access. With the
ability to tap into detailed lifestyle,
financial or medical data, providers
would be able to offer individual
customers more attractive, tailored
quotes for their products.
6. Outsider
In a digital marketplace, the emergence
of new sources of competition from
non-traditional players is always a
possibility. Organisations that select
the ‘Outsider’ business model will be
adept at understanding and accessing
the ‘contemporary customer’ in a way
that incumbent LPI providers cannot.
Depending on the particular capabilities
they can bring to bear, these new
players may decide to target any area
of the value chain. But whether they are
established retailers, or online platforms,
the key to their future success will be
their ability to turn digital disruption and
changing consumer behaviours to their
own advantage. Winning providers in
this space will have in-depth strengths
in digital marketing, search engines and
social networks, perhaps combined with
some of the qualities of the ‘mass-market
hero’ or ‘customer specialist’.
Expect imminent developments.
Remember, Google already has a
traditional banking licence, Facebook
recently secured an e-money licence
to offer financial services in Europe,
and T-Mobile now has some 50 million
customers, 70,000 stores and 40,000
fee-free ATMs in its T-Mobile Mobile
Money network.
Just how quickly these players can
transition to new market opportunities
was underlined by the recent
announcement that Amazon Web
Services and Accenture had expanded
their relationship to develop new end-
to-end cloud migration and management
services for enterprise clients.

16. 16

17. 17
Digital’s arrived…and it’s
changing everything
The LPI marketplace is undergoing an
unprecedented transformation. Digital
has arrived and it’s changing everything
– reshaping consumer behaviours and
expectations and presenting providers
with new opportunities for redefining
customer relationships and rethinking
business models. Driven by digital, the
way that consumers choose to conduct
their financial planning, and interact
with their insurers and pension providers,
is changing at pace. At the same time,
their digital expectations are feeding
into and driving the industry. Customers
now benchmark LPI providers against
their broader digital experiences. To
differentiate themselves from now on,
providers must make themselves distinct
across every channel, digital and physical.
Further fragmentation and
disruption are inevitable
Market fragmentation is underway.
We’re already seeing the emergence of
disruptive new players across the LPI
segment – many more will follow in the
years ahead. And with ongoing waves
of regulation set to be a fact of life
from now on, further fragmentation and
disruption is inevitable. Few can predict
what course this may take, although
the example of Australia provides what
may turn out to be a useful signpost.
Based on Australia’s experience of auto-
enrolment, we should expect to see a
continued shift from defined benefit
to defined contribution, along with a
significant reduction in the number of
funds. A drive towards transparency for
all funds is also likely, particularly where
returns and costs are concerned.
Know your customer
In the LPI marketplace that is
now taking shape, ‘traditional’ LPI
providers face mounting pressure from
some surprising competitors. Having
installed themselves along the value
chain, these disruptive players are
leveraging new, lower-cost distribution
formats to powerful effect. Against this
backdrop, and with digital disruption
well and truly underway, competition
is becoming ever more fierce, with
increased disintermediation of existing
providers by new asset managers,
distributors and platforms.
Seeking to secure their position in this
fast-changing landscape, providers
are reassessing existing distribution
arrangements, changing their product
propositions and targeting operational
excellence across their businesses.
However, a successful outcome in any
of these core areas hinges on resetting
existing customer relationships, as well
as building new ones. Increasingly,
lifetime customer relationships are
being recognised as a major source of
value, helping to drive profitable growth
strategies for the long term.
In a more direct, digital world, providers
will establish these long-lasting
relationships by creating a ‘joined-up’
customer experience across multiple
touchpoints, with simple transparent
product propositions and trusted guidance
that meets customer needs and delivers
value across all life-stages.
From now on, competitive
advantage will accrue to
product manufacturers
with superior product
design capabilities
that can respond to
fast-changing market
demands, as well as to
the distributors, platforms
and, potentially, new
brands that are able
to establish long-term
active relationships.
Staking your claim amid
digital disruption

18. 18
Deciding where to play…and being
the best you can be
The market is changing at pace, beyond
question. New priorities, new dynamics
and new competitors are all facts of
life. To respond to the challenges the
industry is facing and win out in the LPI
market of the future, leaders need to ask
themselves what they want to be famous
for – and then select the business model
that will maximise value in their chosen
market segment/s.
In this paper, we’ve identified the six
business models that we believe will
drive the market through to 2025 and
beyond. Some providers may select a
pure-play model (asset aggregator or
niche provider, for example), others may
pursue a hybrid combination of two or
more models. Whatever course they
decide to follow, the objective must be
to define and organise their operations
around the core capabilities required to
support that model.
In a fragmented marketplace,
differentiation through clear, simple
product propositions is key to success.
Focus will be essential. Investment
opportunities must be rigorously
prioritised to support new business
model enablers and optimised according
to the value delivered for every pound
actually invested. And at every level –
from their operating model and culture
through to their execution capabilities
– providers will have to commit to being
the best they can be.
Getting started…
Of course, implementing radical change
is never easy, especially when firms have
extensive legacy systems and operations.
So how to get started? The essential first
steps are to concentrate on developing
customer-centric operating models,
using advanced segmentation and data
analytics to target customer segments
and rationalise product focus.
Initiating collaborations with new
partners across the value chain will
facilitate the transformation ahead. And,
crucially, harnessing digital technologies
will enable firms to understand their
customers and engage with them more
effectively and at lower cost.
Further industry disruption is inevitable.
With that in mind, UK LPI providers
must take action now to stake their
claim as the progressive providers of
the future. The case studies below show
what can be achieved by companies
that have seized the initiative to shift
their role in the industry.

19. 19
Launched in 1998 by Prudential as the
UK’s first internet bank, Egg stormed to
success, becoming the world’s largest
pure online bank in just a few years.
Providing banking, insurance, investments
and mortgages through its website and
other distribution channels, Egg’s market
share grew robustly at the same time as
it built a sustainably profitable business.
Successful leverage of economies of
scale, excellent brand awareness and
increased automation drove operating
and marketing costs down.
Of real significance to today’s LPI
providers, Egg managed to deliver all
this in an increasingly competitive and
fast-changing marketplace. Within five
years of its launch, many other online
entrants were jostling for position,
along with established offline banks
that had launched their own separate
internet brands.
Egg’s success was built on much more
than price alone. Crucially, the company
recognised the value of genuine, long-
lasting customer relationships and
exploited the opportunities offered
by technology to establish them. By
attracting market share from traditional
banking and financial service providers,
Egg underlined what can be achieved
by using digital and technology to build
a strong consumer brand in a highly
commoditised, product-led market.
Established in 1981, Hargreaves
Lansdown was for many years a
respected adviser to private investors
in the UK on investment management
products and services. More recently,
the firm has successfully repositioned
itself as a one-stop shop in the financial
services sector. With a strong brand,
and the ability to monetise assets better
than its peers through customer-centric
technology, services and channels,
Hargreaves Lansdown is now recognised
as a D2C platform leader. The firm now
has over £36 billion in assets under
management (a 32 per cent increase in
AUM since 2009), and is consistently
top-ranked for the quality of its
customer service.
‘Vantage’, the firm’s flagship service,
is a direct-to-private-investor fund
platform targeted at well-defined
customer segments. Ongoing
investments in technology have paid
dividends by enabling greater speed
and storage capabilities. In 2011, the
firm deployed its digital strategy. This
provided further differentiation through
mobile media, with iPhone and android
apps providing free downloadable
content with full functionality.
Technology innovation and customer
centricity have underpinned the success
of Hargreaves Lansdown’s reinvention.
Unlike its competitors, the firm remains
very active in ongoing employee
communications. This has translated
into a high penetration of non-pension
offerings. Some 16 per cent of the 15,000
employees using its platform also have
a stocks and shares ISA with Hargreaves
Lansdown – far higher sales than any
other workplace savings platform.
Case study 2: Hargreaves Lansdown – repositioned
as a D2C leader
Case study 1: Egg – an idea ahead of its time

20. About Accenture
Accenture is a global management
consulting, technology services and
outsourcing company, with more than
305,000 people serving clients in
more than 120 countries. Combining
unparalleled experience, comprehensive
capabilities across all industries and
business functions, and extensive research
on the world’s most successful companies,
Accenture collaborates with clients to
help them become high-performance
businesses and governments. The company
generated net revenues of US$30.0 billion
for the fiscal year ended Aug. 31, 2014.
Its home page is www.accenture.com.
Learn more
If you would like to hear more about
Accenture’s views on this topic or
would like to discuss how you can
address the issues highlighted in
this paper, please contact:
William Pritchett
Managing Director, Insurance
Head of Accenture UKI Life Pensions
william.j.pritchett@accenture.com
+44 20 7844 5485
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