The heir apparent just three months ago at Scottish Amicable, Gavin Stewart started work at Aegon UK last week, charged with achieving growth in the UK.
Stewart was made redundant in December 2000 after Prudential reorganised its intermediary operations, and was snapped up by the Dutch insurance giant soon after.
He had been with ScotAm since 1996, in the same team under Roy Nicholson and John Cowan, at a time when ScotAm was seen as having a strong spirit of innovation.
Stewart's performance at ScotAm was impressive and, as a proven innovator, Prudential's loss is likely to be Aegon's gain. But he is philosophical about what happened to him when the Pru took over. “The new chief executive reorganised the company and decided there wasn't a suitable enough role for my skills. Things like that happen to people in business. I don't bear any grudges.”
As the financial services industry faces unprecedented change with the challenges of the electronic marketplace, changes to polarisation and the introduction of capped charges, at Aegon, Stewart is charged with predicting the shape of things to come: “My role is to look at the company's strategy on the basis it is to grow in the UK.”
This is a role to which he is well suited. At ScotAm he initiated a strategic review of the impact of e-commerce on the IFA pensions market, as well as masterminding ScotAm's launch into the individual protection market via IFAs and its pre-stakeholder group pension plan.
Prior to ScotAm, Stewart made his mark while deputy managing director of Britannia Life Group and chief executive of Britannia Unit Trust Managers. Before that, he was a senior manager at FS Assurance. He is a Fellow of the Faculty of Actuaries, saying: “I would describe myself as a business person who happens to be an actuary.”
Stewart feels change in the market is unprecedented. He says: “In 1988, when polarisation was introduced, and again in 1995, when full disclosure was brought in, people said these changes were unprecedented, but with e-commerce, polarisation and capped charges, there is even more potential for change over the next 12 months.”
His most immediate task is to look at the outcome of the polarisation review. When asked where he thinks polarisation is going, Stewart says: “If I knew the answer to that I could sell it for a lot of money. With polarisation we are looking at three possible scenarios. The first is where any changes are limited, allowing the building societies and banks to gap-fill for products they don't have.
“The second is a tied form of panel setting. For each individual product market, the agent would offer four products. It is not dissimilar to IFAs who offer tied panels today, but tighter, in that IFAs could not go outside the panel for special purchases for clients with particular needs.”
Stewart sees the third scenario as somewhere between the two. He says: “If the tie is something that can be changed every three or six months, then the new multi-tie agent would be more like a current IFA.”
If polarisation is diluted in the second phase of the FSA's review, Stewart foresees a situation where the length of a tie-in will fix the amount of commission. There will then be multi-tied distributors promoting themselves on the basis they review their product ties every six months and have no long-term ties to any provider.
Others will offer customers the choice of independent advice or a full multi-tie service, or independent advice in all areas save for a multi-tied service in certain products such as mortgages. The risk of consumer confusion across the market is clear.
Stewart sees e-commerce as an opportunity for growth. He says: “A reasonable percentage of customers will be happy to browse and buy, but only from a site that offers choice. There must be a level of interactivity, where you put in your criteria and are told what fits you best.”
He anticipates a future where IFAs will offer both IFA services and advice-free supermarket services on the same website. But he is certain there will always be a need for personal advice.
He believes in the past IFAs have not been effective at selling additional products and will have to become better at cross-selling in the future.
He feels the capping of charges in stakeholder pensions sets a precedent that may develop across the market. “If the Government thinks the cap in stakeholder is a success, they may want to introduce it elsewhere. If a customer sees a 1 per cent charge in his pension, it will be hard to justify higher charges in other products.”
Stewart sees his new position as ultimately a positive move. “I would have been very happy to take this job if I had been at Scottish Amicable. There is more opportunity for me here. Aegon is a very big company and there are plenty of opportunities in the UK and elsewhere within the group.”