What sort of opportunity does the end of compulsory annuities – coming into effect in April – present for the wealth management industry?
The forthcoming changes will impact on financial plans significantly and the subsequent increased need for advice is good news for wealth management firms. Anyone approaching retirement should consider what the new rules mean to them, and given the complexity of the market most people will need advice.
Are there also challenges ahead for the wealth management industry?
Yes, very much so. While the pension rule changes mean there has never been a greater need for advice, there has also never been a time that it has been so expensive and risky to deliver. Currently, if advisers recommend an annuity they need to prove suitability just once – when the product is taken out. The upcoming rule changes bring a plethora of different options at retirement and so things become much more complex. The need to prove ongoing suitability is a challenge.
How can wealth managers ensure they are ready for the end of compulsory annuities?
Firms will need to ensure they have adequate systems that can cope with these complexities. This is no easy task given that much of the technology in use in the industry today was developed a considerable time before the introduction of the RDR. Indeed, in many cases it is struggling to keep pace with today’s requirements for outcomes-based solutions and suitability testing.
Are firms responding to the need to invest in technology?
Yes, by and large they are. In the past many in the wealth management industry decided that the risk of doing nothing was less than the risk of doing something. But things have moved on, and we now find ourselves at a tipping point where the cost of doing nothing is no longer an option if firms want to ensure they remain compliant and effective.
What place does outsourcing have in financial services today?
We are seeing more and more firms across the industry outsourcing areas of technology that are not core to their business propositions. This allows them to focus on growing their brands, delivering first-class advice, and building long-lasting relationships with their clients.
How can technology help wealth management firms grow their businesses?
The competitive advantage that efficient systems can bring allows a much wider client base to be serviced. In the recent past, there has been a focus on reaching high net worth individuals, but the mass affluent market is starting to look attractive again if proper systems are installed.
Tell us a little about your life outside of work, do you have any hobbies?
I am an avid Chelsea FC fan and have a season ticket for Stamford Bridge. I also enjoy good wines and spending time with my children.
What is the one column or website that you read every day?
I try to keep up with the Financial Times as much as possible. When I am at my desk I like to have one eye on the big stories on bulletins like Citywire and Money Marketing.
What is your biggest pet peeve, or makes you angry?
I like to think I am a straight talking person and so get deeply frustrated when people feel it necessary to add unnecessary process or layers of bureaucracy.
What would you do if you were Prime Minister for a day?
I would give the Financial Conduct Authority the day off.
What would you do if you received a windfall of £1000?
I would take my daughters to Paris on Eurostar for lunch.