I'll brain the next person who says to me: “What's it like to be back at the Pru?”
It is six years since I last worked for Prudential. In the meantime, it has changed beyond all recognition. Just over 10 years ago, in 1991, there were 9,500 direct salespeople and IFAs accounted for a bit less than 5 per cent of the business. Today there is no direct salesforce and IFAs provide around 62 per cent of UK new business. The focus has indeed changed.
And of course I have changed a bit, too, in the last six years.
Last week I was asked by a well known figure in our intermediary world whether my three years running the DBS network would be helpful in adding value to the job of increasing the profitability and scale (in that order) of the Pru's UK IFA operations
My immediate response was: “In a year's time you tell me whether it's made any difference, because what counts will be what influential IFAs think.” And although that may be a bit too smooth for your taste it is absolutely true.
Not put off by my response, we did explore the lessons learned during the time spent at DBS that would help Prudential add value to IFAs.
The main lesson was the need for many product providers to embrace humility and learn to listen to their customers.
The priorities at the network were to find new members, keep the existing ones reasonably happy and fully compliant, to help them to become more productive and to spend as little money as possible doing it all. Products? Products? The last thing on my mind. Yet too many of these highly paid life insurance company folk would beat a path to my door to extol the virtues of the Pond Life Bottom Feeding Smoke and Mirrors Pension Plan.
Worse still, they assumed I knew nothing about product design. Actually, having spent 10 years at it, I can zillmerise my liabilities with the best of them. Modesty should prevent me from saying that the Prudence bond was a small success of the marketing team I ran during my first tenure at the Pru.
So, there we were being regaled with all the sales pitch, knowing full well they were selling £5 notes for £10 (it's called initial commission on regular-premium pensions).
Apart from nuclear power stations, is there any other industry where you deliberately design your products so that it takes 16 years to get your money back? And we do that in a market where, if the investment performance goes a bit wonky or the service creaks, then the adviser can move the money to another provider without penalty and you lose your shirt. Or your policyholders lose their shirts. Run that by me again?
Talking with another group of IFA friends on Monday last week, they have recently employed their own actuary. The news is that many product providers are betting on the Government making contributions to stakeholder pensions compulsory. Well, probably it will, eventually, depending on how the opinion polls are going.
But do we really believe that, given our current standing in the eyes of the Government, it is going to bail out the industry by allowing us the luxury of a 1 per cent margin on compulsory contributions? Come on!
So, apart from listening very hard to understand what our IFA friends want and need from us, how else might my poacher experience help my new gamekeeper role?
By enabling me to have businesslike, grown-up conversations with IFAs about how we plan only to participate in those markets where we can create value for the end-customer, create value for the IFA and create value for our own shareholders.
That's how every successful IFA I know runs his or her business. For any of us to pretend anything else undermines the future of the whole market as the Equitable Life debacle has clearly illustrated.
Tell me again which side is the poacher?
Tony Kempster is distribution director for Prudential intermediary business.