I have always worked in the retirement area – apart from when I ran an online casino for four years,” says Retirement Solutions director David Bell. “It was actually a great introduction to running a business.”
Bell started his career as a sales manager at Prudential, working his way up to branch manager by the time he left the business in 1999. “I went to the Pru pretty much straight from university. I did a lot of work with teachers and lecturers under the additional voluntary contribution scheme, so it was a broad role.”
When Prudential closed all its regional offices, Bell seized the opportunity to do something different. “A partner and myself purchased an online casino. It was good fun but when Richard Houghton, one of my Prudential colleagues, said he was launching an annuity comparison site, I thought it made sense to get involved.”
The move to focus on the annuity market was no spur of the moment decision. “It was quite well known that at-retirement was going to be the place to be, so we decided to have nothing to do with accumulation and go for pure decumulation.”
After four years at Annuities4U, the business expanded and rebranded following its merger with Retirement Solutions at the beginning of this year.
“In January, Kevin Stelfox of Retirement Solutions came on board. His background is in long-term care and equity release, so we decided to adopt the Retirement Solutions name rather than stick with annuities. We had also been doing more with third-way products and income drawdown, so the old name was too restrictive.”
Bell believes embracing third-way products is what sets Retirement Solutions apart. “These new options are being missed out by lots of companies, especially among advisers. We hope we fill that gap.”
With recent hybrid product launches from Just Retirement and Aviva, Bell says Retirement Solutions is well placed to capitalise on a changing market.
Enhanced annuities are also key to the business’s proposition. “Seventy per cent of our annuities are enhanced because we are experienced in this. We know the questions that can get an enhanced rate, such as a bit of blood pressure. With rates so low at the moment, people need these enhance-ments to make it worthwhile and they need the advice to help them do this.”
Bell says consumers are gradually becoming aware of options other than the traditional annuity.
“More and more people are definitely understanding there are options out there but they are not aware of the options that are available. People do not know there is anything between annuitising and drawdown. Another problem is it is just not in the bigger companies’ interest to advertise the Omo when they have their own products to push.”
The third-way market has been predicted as the next big thing for several years now but Bell says it will soon come into its own. “At the moment, we are on one of the worst situations because funds have dropped and annuity rates are low. But that is where third-way products have a place. People can do something for the short term with a view that rates are going to improve, so they can stay invested and keep the option of annuitising in the future.”
This increasing flexibility caters to the older generation who are working past retirement. “We see lots of people who see retirement not as stopping but as slowing down. They do not need all the tax-free cash and income maximisers but they need something flexible. There is more splitting of pots to do different things such as phased drawdown and an enhanced annuity.”
Alongside hybrid products, Bell says Retirement Solutions’ equity-release business also looks set to benefit from changing market conditions.
“Property prices have increased so much for people who are retiring, so they have a lot of money tied up in their homes and not so much in their pension funds.
“They might have a £35,000 pension and a £450,000 house, and they are realising that the £450,000 figure is where they get their retirement income from.”
Bell says equity release links into long-term care, which could also give Retirement Solutions a boost.
“We see these ’sandwich generation’ clients putting their children through university and their parents through care homes and equity release is a way of helping with this.”
Regulation could also tip the market. “We already outsource for some big IFA firms who recognise that they do not run a very tight ship when it comes to annuitising but, under the RDR, there should be more of them recognising that we run a very slick operation and that they are happy to hand that side of things to us.”
Bells says Retirement Solutions is RDR-ready in terms of remuneration structures. “Our non-advisory desk in Northampton and our equity-release arm will continue as they are because they do not fall under the RDR remit and we already operate under a fee structure for the larger pots.”
But one decision the company has not made is whether to take the independent or restricted route. “We are having meetings at the moment to decide which one will be easiest. We do not want to lose our whole of market status so we could end up with two separate companies – an independent IFA and a restricted annuity advisory business.”
Bell is confident about the future of Retirement Solutions and is comfortable with its niche market.
“We have chosen to specialise in an area that needs advice. I know I keep harping on about it but third-way products are the future and you cannot do them non-advised, especially in a situation where rates are low and funds are dropping.”
Over the next year, Bell wants to begin plans to grow the firm significantly. “We already have 30 staff but now we are looking at taking on bigger deals with other people’s annuity desks. We are self-generated at the moment and can function as we are but we want to take it to the next level. Currently, we are 10th in the country’s retirement advisers but we think we can get into the top four. That is an achievable aim.”
- Born: Manchester
- Lives: Cheadle Hulme, Cheshire
- Education: Xaverian College, Manchester, University of Liverpool
- Career: 2010-present: director at Retirement Solutions (UK), 2006-10: director, Annuities4U, 1999-2005: director, UK Casino Club. 1985-99: branch manager, Prudential;
- Likes: Sport, music, films and literature
- Dislikes: Negative people
- Drives: BMW 6 series
- Book: The Ginger Man by JP Donleavy
- Film: Once Upon a Time in America directed by Sergio Leone
- Album: London Calling by The Clash
- Career ambition: To be in the top three providers of at-retirement advice
- Life ambition: To be healthy
- If I wasn’t doing this I would be…The tambourine player in the Pogues