Aviva reveals direct plans in anticipation of IFA cull

Aviva has revealed plans to grow an in-house distribution channel to sell products direct to consumers as it anticipates adviser numbers will be cut in half due to the retail distribution review.

At an analyst and investor event this week, the firm revealed that it expects the number of IFAs in the UK to drop from around 21,000 to around 10,000 by 2013, creating a provision gap, which it would target with a team of tied advisers.

The firm suggests that 40 per cent of its UK life client base of 6.9 million have no active adviser.

The presentation also reveals the provider will pursue a renewed focus on the middle-market at the expensive of high-net worth consumers.

Aviva claims this strategy “plays to our strengths” and is less competitively crowded than the more affluent sectors.

It adds that this “heartland” is not only distinctive but more profitable than targeting the super rich.

Aviva expects the corporate market, bulk annuities and tie ups with banks and building societies, such as its joint venture with Royal Bank of Scotland, to be profitable routes to the mass market in future.

It also revealed it is reviewing its offshore bond business in a bid to improve margins in bonds.

Lighthouse joint chief executive Allan Rosengren says: “Ultimately it is for each business to determine its own strategy but I think it is erroneous for Aviva to believe that IFA numbers will halve. I very, very much doubt that would happen in fact I see demand for independent advice growing over the years ahead.”

Hargreaves Lansdown pensions analyst Laith Khalaf says: “Norwich Union appears to be positioning itself for a post-RDR world which will elevate the status of banks and direct sales as distribution channels at the expense of IFAs.

“It is unlikely to be the only one thinking along these lines and IFAs may find themselves increasingly distanced from the insurance firms with whom they have traditionally transacted business.”

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