View more on these topics

Back in business: Is the Man from the Pru set for a comeback?

What the savings giant’s planning push means for advice

As the latest provider to announce plans to expand its financial planning arm, Prudential has caught the eye of the advice market.

Earlier this month the savings giant announced it was recruiting an additional 30 advisers. Speaking to Money Marketing, Prudential Financial Planning chief executive Chris Haines now says this growth is set to continue, with the company looking to hire a further 70 advisers over the next year.

This would boost its network of restricted advisers to more than 350, making it one of the 10 largest advice firms in the UK.

Pru is not the only insurer or asset manager extending its reach into the advice sector and expanding its distribution network. Standard Life, Old Mutual and Aviva have all recently expanded their own advice networks.

But what does a legacy brand with a history of tied advice pinning its colours to the planning mast mean for the profession?

The start of a journey

Haines makes no bones about the growth ambitions for Pru’s advice business. He says: “We want to grow our business. Growth is good. It helps us to achieve economies of scale we otherwise wouldn’t have.”

Haines says the company is aiming to grow its network of restricted advisers – or “partners” as it calls them – by 10 per cent each year. At the same time, he says the company hopes to improve efficiency and adviser productivity by a further 10 per cent year on year.

But these ambitions are tempered with a degree of realism. There will inevitably be years, he says, when such targets are not achievable. “But at the moment do I think this level of growth is possible? The answer is absolutely.”

Haines joined Prudential in 2009. His first role was to build the business case for the savings giant to go back into face-to-face advice, a market it had quit more than a decade earlier.

PFP was launched in 2012 in the wake of the RDR. Haines was clear from the outset this was to be a financial planning service – albeit offering restricted advice – rather than the large salesforce the company ran in the 1980s and 1990s. “The Man from the Pru is still an iconic brand – but the proposition has changed since then,” he says.

He is also keen to stress that the success of PFP does not diminish – or threaten – the company’s commitment to the independent advice sector.

The Man from the Pru is an iconic brand – but the proposition has changed

Haines says: “Prudential’s core route to market remains the intermediated channel and it will continue to be so for the foreseeable future.”

He adds: “It’s important to remember that PFP exists principally to serve the needs of existing Prudential customers, many of whom were sold pensions and other investment products by our antecedents 15 to 25 years ago.”

Target markets

Haines says Pru has a customer base of around one million. Some 40 per cent of these have personal pensions. Haines says: “These baby boomers are now approaching retirement. Given the complexity and seminal significance of the decisions that have to be made at this point, we wanted to be able to offer some form of advice and guidance to our existing customers.”

However, Haines says “commercial realities” mean they are not in a position to provide advice to all their customers. “We’re delivering advice to the upper end of our customer base. We’ve built our proposition to match, for want of a better term, ‘middle Britain’. Our target market is probably couples within 15 years of retirement with relatively modest household earnings, say, of £40,000 to £50,000.

“They face the challenges we all face when it comes to retirement planning, but they have the means to be able to do something about it .”

Adviser viewGill-Cardy-700x450.jpg
Professional Partnerships IFA business consultant Gill Cardy

I simply do not accept that restricted advice is acceptable, particularly if you are paying virtually the same fee. A panel of approved providers is better but still not satisfactory. The point is clients don’t know what they don’t know, so won’t necessarily seek anything better. None of this would be an issue if there were enough advisers advising those of more modest means. This has created a gap, which providers are looking to fill.

Delivering efficiencies and lowering the cost of this advice may in future help PFP extend its reach, and offer planning to those lower down the demographic scale. “Automation and technology will play a part in improving processes,” Haines says. To this end PFP has recently introduced a telephone advice service.

But Haines says: “We are still a long way from end-to-end digital advice. Today’s robo-advisers can’t persuade or reassure customers. A robo-adviser may come up with a brilliant investment plan, but if it’s not acted on it is essentially worthless.”

Recommended

fee template

Asset managers brace for fee template as FCA unveils plans

A new FCA committee has set the timeline for its fee template for asset managers as it publishes details of how it will go about its analysis. Money Marketing earlier this week the disclosure working group set up by the FCA following its final report into the asset management industry was about to set out the objectives […]

Phil Wickenden
4

Advisers are wrong to break away from bonds

They say politics is more determined by negative drivers than positive. Clown-like or otherwise, Donald Trump, Nigel Farage et al are anti-politicians who embody many of the characteristics that people feel are absent from their mainstream rivals. There has been a clear pendulum swing away from mainstream political institutions as wider disillusionment with the establishment […]

State of the markets: global growth

In conversation with journalist Alexis Xydias, Artemis Global Growth Fund manager Peter Saacke discusses the state of global markets and how he is positioning his fund. Peter gives his views on the growth potential of US, Europe and emerging markets, each of which is on a different stage of the road to recovery. And with a […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There are 5 comments at the moment, we would love to hear your opinion too.

  1. To answer the question in the title of the thread – I hope so. There is a massive market for this type of adviser/sales person. These clients need served so I personally hope this area is a huge success for the Pru.

  2. They are not “partner”, they are not Restricted, they are Tied Agents, as are SJP,ect. we must not allow Tied Agents , cross subsidised, Contingent charging, Targeted VQB, obfuscation to mislead the Public, this Rash needs eradicating, Please explain to me what the RDR was all about.

  3. I agree with Gill Restricted advice in its many formats Tied Agent( employee to tied adviser)- and they wish to be paid the same amount of money(in their case commissions – so no explanation of fixed fee or financial costs). The quality of compliance is also reduced – which means in terms of Value for Money – it offers poor value. However this is not the case at St James Place – where their advisers remain highly trained which is paid for out of their client charging. Pity insurance companies do not take the same level of commitment to their clients and their agents? Why not ? Because they do not have the same level of commitment – to anyone!

  4. Trail commission would help, imagine how much of that is sloshing around in Scrotam alone….most of the business was introduced by IFAs. It’s a funny old business.

  5. I side with Marty on this one, and am not sure I understand where the critics are coming from.
    The Pru’s target market is people with circa £50k in savings, so hardly most IFAs ideal clients.
    Since RDR many IFAs have jettisoned lower value clients and moved higher up the wealth scale. Indeed MM has another article that shows many IFAs won’t advise on drawdown unless a client has at least £150k in their pot, so where do you expect all these people to get advice?

Leave a comment