Toby Strauss

12 August 2010 12:00 pm | By Helen Pow

Avid sailor Toby Strauss has navigated himself into the role of Aviva UK life and pensions chief executive in just over two years with the insurer.

Strauss started out in technology where, working for IBM, he was introduced to the world of financial services through his client Allied Dunbar.

He has hopped between technology and financial services ever since and in 2008, having forged successful careers in both industries, Strauss was give the task by Aviva to clean up the mess that was its Lifetime wrap, using both skill sets.

Strauss says: “I came to Aviva to help solve the problems with the wrap, which has a bit of a chequered history, and have moved on within the company since then.

“Aviva was investing money in something that was not stable and solid enough at the base and stresses and strains started to show. It lost us more money than we would have liked. We had to pull out for 18 months while we fixed it.”

Strauss, who became chief operating officer of the life business in 2009 and chief executive in January this year, says the wrap, which relaunched this year, now operates as it should.

Aviva would not reveal assets under management for the product in its interim results but Strauss says it is regaining trust and traction among IFAs.

Now pensions are taking up a lot of Strauss’ time, particularly with the recent barrage of consultations and reviews. He is supportive of some of the proposals is but believes others could pose problems.

He says the age 75 proposals are sensible and Aviva has suggested the Government sets the minimum threshold at twice the state pension, to prevent people running out of money and falling back on the state. Strauss also welcomes auto-enrolment, adding that delays to implementation would be a missed opportunity.

But he is less convinced about the National Employment Savings Trust and says Aviva would be interested in filling the gap if the Government decides to scrap the scheme in October, when the Tata contract comes up for renewal. But he insists the Government would have to make some compromises to ensure the private sector can make a profit.

“If the Government wants a discussion on how Nest could be adapted as something we could run with in the private sector, we would be very up for that. The politicians could save some money by doing it differently but they would have to compromise on some of the universal provision in order to get there.”

Things that need tweaking include the point at which people become eligible for Nest and, encouragingly for pension providers, pensions minister Steve Webb has already signalled that the Government is open to this.

Strauss says: “It is very difficult to provide a service to employees cost-effectively from the day they join in sectors with high turnover, so some kind of deferred period would be helpful. Also, with the Nest scheme, you can stop and start and it goes into the same pot. We would need to find a way to do that in the private sector. These are just a few of the different levers that would help make this work for the industry.”

He is concerned the Government’s alternative restrictions on pension tax relief may still be overcomplicated and put higher-earners off pensions. The Government has moved away from the complicated idea for tapering tax relief for the highest-earners and has suggested cutting the annual allowance from £255,000 to around £40,000.

“The whole pension system needs simplification and that is what the coalition should focus on. The previous Government’s approach was going to be extremely difficult to implement so the proposal to use an allowance is a better alternative.

“But at the lower level we have a concern that people on higher incomes will still not bother with pensions. If we set the level too low and directors of companies decide pension saving is not for them, we will get a trickledown effect where they no longer show interest in pensions for their staff either.”

Government proposals to cap pension tax relief at 40 per cent would also be painfully complicated, he says.

On the subject of the retail distribution review, Strauss says Aviva is committed to a healthy distribution base. He believes a lot of advisers are continuing to work on a commission basis, albeit moving towards trail, rather than switching to pure fees.

“This is a good thing because there is a better alignment of customer and adviser incentives if they are paid over time rather than up front and, in today’s world at least, there are customers who would not pay the fees needed to get the level of advice they want.”

Customers’ unwillingness to pay fees will be a major challenge after the RDR, according to Strauss, who says Aviva is continuing to work on developing some form of simplified advice for the mass market. “There is a significant risk of a big advice gap where nobody is serving the mass market. We, and others, continue to have discussions on how a simplified advice regime could work. No one has got there yet but it is something we have to crack to make the post-RDR world work.”

This month, Aviva renewed its arrangement to distribute protection and pension products through Royal Bank of Scotland. It also signed an exclusive five-year deal with Santander, which will see its life insurance, critical-illness and income protection products distributed to the bank’s customers.

Despite Axa recently pulling out of critical illness and Aegon refusing to commit to the market since revealing an array of cost-cutting measures in June, Strauss says there is good potential for growth in these markets and these deals allow Aviva to better provide for the middle market, in terms of protection.

“Protection has great growth potential but you need scale to invest in the proposition. We see the fact that some providers are leaving the sector as good news because it gives us more opportunities in a proposition line that we think has great legs.”

But, despite the bank tie-ups, Strauss, who headed Towry Law between 2003-05, insists Aviva’s focus remains on the IFA sector. “Banks and building societies have an increased focus on protection and we have a very good proposition in that space but we are continuing to focus and invest in the IFA sector because this is our heartland.”

Away from the day job, which sees him regularly travelling between his West London home and Aviva’s offices in York and Norwich, Strauss enjoys sailing and has recently returned from a jaunt with the family in the South of England. He is also a keen cyclist and plays guitar in a classical ensemble.

Born: London, 1959
Lives: West London
Education: St Paul’s School, Loughborough University Career: (2008-present) chief executive, chief operating officer, managing director, Aviva Life UK; (2005-08) chairman, OrderWork; (2003-2005) chief executive, Towry Law; (1999-2002) managing director, Charcol; (1993-99) associate partner, McKinsey; (1988-92) founder, Psiax; (1984-88) account manager, IBM
Likes: Being positive, driving things forward, complexity, being around smart, fun people
Dislikes: Negativity, things not working, slow drivers in the middle or outside lane Drives: Mini Cooper
Book: The Making of Modern Britain by Andrew Marr
Film: Johnny English (with my children!) Album: Rodrigo y Gabriela
Career ambition: To do a good job Life ambition: To live life to the full
If I wasn’t doing this, I would be…Sailing

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