Barry O’Dwyer is full of optimism as he surveys the financial services landscape. Standard Life’s managing director, adviser and workplace, and the new chairman of the Association of British Insurers’ long-term savings and life insurance committee, sees the industry as “vibrant and competitive”, delivering “fantastic value for customers in the UK”.
But as we head into the festive period, O’Dwyer feels that some in the industry can resemble Scrooge when it comes to expressing good will towards their peers and celebrating what is good about financial services.
“We are too good as an industry at having a pop at one another,” he says.
“The vast majority of providers and advisers want to do a good job for customers. Yes, there are some bad apples but we spend a disproportionate amount of time on those or criticising things that could be slightly better.”
O’Dwyer concedes that there is still some work to do on building public trust in the industry but he feels there are grounds for optimism since the RDR paved the way for “a fantastic level of professional advice”. He also highlights the low level of cost associated with long-term investment through asset managers and life insurance companies as a reason to be cheerful.
According to O’Dwyer, the workplace is becoming more important to providers.
“One of the consequences of RDR is that advisers have fewer customers and typically focus on the wealthy, so the route into the mass market is unlikely through advisers. Our route is increasingly through the workplace.”
Auto-enrolment has brought a million new customers to Standard Life, which is more than it could have acheived via any other route, says O’Dwyer.
“What we need to do is encourage more people to take long-term savings seriously. Auto-enrolment savings levels aren’t adequate to fund retirement so we need to encourage people to save more and encourage them to be the customers of advisers, as they will need advice,” he says.
The pension reforms announced in the Budget will create huge short-term opportunities for advisers and providers in O’Dwyer’s view, while the workplace is creating long-term opportunities.
“They are complementary,” he says. “There are massive opportunities for advisers to demonstrate that they can add value.”
O’Dwyer, who confesses to being an “IT geek” when he was younger, would have been lost to financial services had he followed his original plan to undertake a computer science degree.
“I grew up in the 1980s when home computers took off. I created programmes using 17 different computer languages as a kid. I was about to study computer science when my dad saw an ad for a trainee actuary with Standard Life in The Irish Times.”
The rest, as they say, is history. Now in his second spell at Standard Life (he left in 2007 to return again in 2013), O’Dwyer took to the company like a duck to water and stayed for 19 years initially. What kept him for so long?
“I was asked to do something new every few years. The company was – and still is – strong in people development. I had spells on marketing and sales, I was seconded back to Ireland and then came back to run the corporate side of the market,” he says.
However, he left in the summer of 2007 to join HBOS in 2008.
”I just wanted to do something different. I was conscious that I’d spent 19 years with the same company and wanted the experience of working elsewhere. But I parted with Standard Life on good terms… and I’m back.”
Indeed, O’Dwyer was at HBOS when the financial crisis was in full swing in 2008.
“It was an extraordinary year and HBOS ceased to exist at the end of it when the takeover by Lloyds was announced. I wouldn’t wish to relive the experience but it was an extraordinary thing to live and work through,” he says.
In 2009, O’Dwyer moved to Prudential, where he remained until his return to Standard Life. He admits that coming back to the company was strange at first but he slotted back easily as he already knew the culture and many of the people.
As we prepare to bid farewell to 2014 O’Dwyer is happy that Standard Life’s platform business has acted swiftly to accommodate regulatory change.
“We moved quickly to make it easy to pay tax on rebates so advisers and clients didn’t have to worry about the admin side and also moved to clean share classes ready for 2016,” he says.
O’Dwyer is excited about the opportunities pension reform will create in the drawdown market but points out there will be challenges in the provision of advice.
“We’re looking at how we make sure clients get advice post-April. There will be five times more people in drawdown than there is now. How do we get these people in approporiate solutions? Advisers are part of the solution but we don’t have enough. Some people will have pension pots of £80,000 and need advice but a lot of advisers say they can’t construct a proposition for clients of that size because it’s not economic. Some firms are busy enough with the clients they have and are not looking for new ones. We need a solution to that – we have got to get this sorted,” he says.
One of the problems is that the line between guidance and advice is almost invisible to clients, he says.
“From the client’s viewpoint it doesn’t feel like a huge cliff edge because, when a client is told what they could do, the natural human response is to ask: ‘What would you do?’ No guidance service is going to offer an answer to this as it’s a regulated activity.”
In O’Dwyer’s view the only answer is for the industry to pull together to find a cost-effective solution.
“It will require everybody to work together. Advisers will run into economic problems within the current regulatory structure, so we need to work together on how to construct a way that protects the consumer but gives providers and advisers an economic means of delivery.”
2013-present: Managing director, adviser and workplace, Standard Life
2010-2013: Deputy chief executive, UK and Europe, Prudential
2009-2010: Managing director, retail life and pensions, Prudential
2008: Products and marketing director, HBOS
1988-2007: Various roles, Standard Life
What is the best bit of advice you’ve received in your career?
Recruit for attitude, everything else can be learned.
What keeps you awake at night?
I usually don’t have trouble sleeping but if anything was to keep me awake it would be worrying about how to prepare my kids to compete in an increasingly global market.
What is the most significant impact on financial advice in the past year?
The Budget changes and the subsequent change to the death tax. They have transformed the way clients can use pensions.
If I was put in charge of the FCA for a day I would…?
Beginning with product illustrations, I would put a match to almost all existing customer disclosure documents and start again from scratch, building an alternative that customers will actually read.
Any advice for new financial advisers joining the profession?
Stay focused on what is best for your client. Figure out where you add value and, if you can, outsource everything else to the best people and firms you can find.