Scribd Logo
Upload

Welcome to Scribd!

  • 40 views

    The UK Retail Financial Services Market: Capturing The Opportunities

    Uploaded by

    iansmith66
    The document discusses opportunities in the UK retail financial services market. It outlines changes including an aging population, savings and protection shortfalls, and evolving distribution channels. Legal & General is well positioned to capitalize on opportunities due to its strong brand, broad product range, and multi-channel distribution network including ties to banks, building societies, and independent financial advisers. The fund platform model is transforming the market and advisers want access to a single platform. Legal & General believes regulatory stability and demand for retirement savings will drive substantial growth in the UK market.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd

    The UK Retail Financial Services Market: Capturing The Opportunities

    Uploaded by

    iansmith66
    40 views13 pages
    The document discusses opportunities in the UK retail financial services market. It outlines changes including an aging population, savings and protection shortfalls, and evolving distribution channels. Legal & General is well positioned to capitalize on opportunities due to its strong brand, broad product range, and multi-channel distribution network including ties to banks, building societies, and independent financial advisers. The fund platform model is transforming the market and advisers want access to a single platform. Legal & General believes regulatory stability and demand for retirement savings will drive substantial growth in the UK market.

    Original Title

    UK_Strategy_SG_Conference_021205

    Copyright

    © Attribution Non-Commercial (BY-NC)

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    The document discusses opportunities in the UK retail financial services market. It outlines changes including an aging population, savings and protection shortfalls, and evolving distribution channels. Legal & General is well positioned to capitalize on opportunities due to its strong brand, broad product range, and multi-channel distribution network including ties to banks, building societies, and independent financial advisers. The fund platform model is transforming the market and advisers want access to a single platform. Legal & General believes regulatory stability and demand for retirement savings will drive substantial growth in the UK market.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    40 views13 pages

    The UK Retail Financial Services Market: Capturing The Opportunities

    Uploaded by

    iansmith66
    The document discusses opportunities in the UK retail financial services market. It outlines changes including an aging population, savings and protection shortfalls, and evolving distribution channels. Legal & General is well positioned to capitalize on opportunities due to its strong brand, broad product range, and multi-channel distribution network including ties to banks, building societies, and independent financial advisers. The fund platform model is transforming the market and advisers want access to a single platform. Legal & General believes regulatory stability and demand for retirement savings will drive substantial growth in the UK market.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 13

    The UK Retail Financial Services market:

    Capturing the opportunities

    Robin Phipps
    Group Director (UK Operations)
    2 December 2005
    1
    Agenda

    • Brief overview of Legal & General

    • The UK market – changes and opportunities for Legal & General


    • Competition and Regulation
    • Changing demographics
    • Savings and protection shortfalls
    • Evolving distribution

    • Conclusions

    • Questions

    2
    Legal & General Group

    • Market capitalisation of £7.5bn (€10.9bn)


    • 3rd largest life assurer in the UK

    • Significant fund management business - £187bn (€273bn) under


    management
    • Average inflow over £1bn (€1.5bn) per month over last 8 years

    • Nearly 90% of Group profits derived from the UK


    • Smaller businesses in France, Netherlands, Germany and the USA

    3
    Legal & General UK business

    • UK individual business market share over 11%


    • market share doubled since 2000
    Annuities Protection
    • Broad range of products for Individual 13% 19%
    and Corporate markets

    • Strong partnerships with Banks and


    Building Societies

    • Leading Direct provider


    Collective Pensions
    • Well-recognised brand – favourable Funds 28% 22%
    view from financial journalists Investment
    Bonds 18%

    4
    UK Life & Pensions market

    Competitive picture
    • Scope for further concentration
    • Top 5 Life & Pensions providers have 48% of new business (2000: 37%)
    • Real scale advantages from brand/technology costs and underwriting
    information

    Regulation
    • Complex and costly system of sales regulation
    • but system now largely stable and implemented by market
    • complexity favours large providers
    • Government looking to reduce burden of regulation for compliant firms

    5
    The UK: Changing demographics

    Number of people aged 65 and over


    • Not a time bomb but an iceberg,
    moving slowly towards us
    millions
    20 • State provision increasingly stretched
    • Basic State Pension well below EU
    15 average
    • Employers moving away from defined
    10 benefit pensions

    5
    • Boundaries between public and
    private healthcare provision are
    blurring
    0
    • Increasing inheritance to help fund the
    cost of ageing and healthcare
    60
    70
    80
    90
    00
    10
    20
    30
    40
    50
    19
    19
    19
    19
    20
    20
    20
    20
    20
    20

    6
    The UK: Savings & Protection
    opportunities
    • Retirement savings shortfall £27bn+ (Mercer Oliver Wyman 2001)
    • Pensions Commission recommendations for Government policy
    • Increase in retirement age
    • Changes to state pension
    • Increased pension saving
    • Pensions tax changes 2006:
    • transfers • higher tax relief limit
    • SIPPs • income drawdown

    • Protection shortfall “conservatively” estimated as £2,000bn cover


    (Swiss Re 2002)
    • current ABI new protection business £1.4bn pa APE could double
    • tax-efficient term assurance using pensions tax relief
    • expertise of leading providers has created significant entry barriers

    7
    The UK: Distribution changes
    Depolarisation
    • 1988 – 2005: all investment advisers “polarised” as either:
    • Independent Financial Advisers (IFAs): choose most suitable product from
    whole market, or
    • Tied Agents, selling products from a single provider

    • From June 2005: Complete flexibility of status

    • Market expectation:
    • many IFAs would “multi-tie” to 4/5 providers
    • a race to secure distribution
    • But in practice:
    • limited impact
    • probably less than 10% of total market to multi-tie

    …and a new route to investor choice is emerging


    8
    The UK: Distribution changes
    The rise of the Fund Platform
    Adviser Customer • Single technology platform
    offering wide range of funds
    from different managers
    Fund Platform • Has transformed markets in
    USA and Australia
    • Customer benefits
    • wide choice of investment funds
    ISA Pension Bond • range of product wrappers

    Product wrapper providers • Adviser benefits


    • facilitates ongoing advice
    • reduces back office cost

    A B C D etc • Advisers want single platform


    • effective tie to one platform
    Fund managers
    9
    The UK: Distribution changes
    Channel prospects
    IFAs
    • Still the predominant distribution channel, but some significant issues:
    • overhang of industry compensation costs
    • ageing adviser population
    • need to show added value to clients from ongoing investment advice
    • Recovery in income from individual pensions
    • Limited impact from shift to multi-ties

    Banks and Building Societies


    • Market penetration significantly below some EU markets
    • Huge gap in bancassurance results between banks
    • reflects level of commitment and quality of execution
    • levelling up to best practice could expand total market by 20%+

    10
    Legal & General: capturing the
    opportunities
    Legal & General
    A strong, flexible distribution network:
    Tied
    Agents IFAs (56%) • Stable and growing flow of business from
    & Direct strong Bank/ Building Society partnerships
    (11%)
    • Major synergies with strong mortgage
    Banks/BS intermediary business
    (33%)
    • Stability gives base for increasing presence in
    IFA market
    Market
    • Leveraging capabilities across distribution
    channels
    Tied IFAs (60%) • Specialised Corporate Business units
    Agents
    & Direct
    (16%) Banks/
    • Strategic stake in Cofunds technology platform
    BS
    (24%)

    11
    Conclusions

    • Substantial opportunities in a more orderly UK market


    • Regulatory stability + need for increased personal savings
    • Multi-tie impact likely to be limited – fund platform developments
    more significant
    • Banks/BS to increase market share – Legal & General well
    positioned to capitalise
    • A well-recognised customer brand
    • Broad product spread, good quality of service + multi-channel
    access vital to success

    Legal & General is well equipped to turn


    change in the UK market into opportunity
    12

    You might also like