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MetLife UK closes to new wealth management business

The division grew to £5bn assets under management since its launch in 2007 but will now shut over interest rate hit

Metlife UK is closing its wealth management arm to new business, saying low interest rates have made it difficult for the division to deliver value for the company.

The move effectively means the provider is pulling out of the unit-linked guarantees market.

Metlife has told regulators and service providers of its plans and is writing to existing customers and their advisers.

The company will now look to grow its employee benefits and individual protection businesses.

According to a statement, illustrations for new wealth management business will stop at 5pm on 7 July with applications accepted until 5pm on 28 July.

Metlife UK managing director Dominic Grinstead says: “Our wealth management business has grown to £5bn assets under management since launch in 2007, which is a testament to the hard work and commitment of our staff and the success of our products.

“However, while our wealth management products deliver good outcomes for our customers, the ongoing challenge of long-term low interest rates has made it difficult to deliver value for Metlife. After thorough analysis, we have decided to focus on our employee benefits and individual protection business.”

He adds: “We will work with our colleagues to support them as we go through this important transition. We are committed to providing the highest level of service to our customers and financial advisers.”

In 2015, Metlife launched a lower-cost guaranteed drawdown product that it claimed was the first genuine innovation following the introduction of pension freedoms.



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There are 11 comments at the moment, we would love to hear your opinion too.

  1. Not a great business to be in for solvency ratios I guess (providing the guarantees).

  2. Julian Stevens 7th July 2017 at 9:49 am

    “value for the company”? What about value for its customers?

    The problem with the small crop of investment-linked retirement income products with locked-in gains (now just two, I believe) is the level/s of initial income they allow, which are a unhappily lower than a straightforward annuity. Most people (not everyone, of course, but most people) want the maximum amount of income their pot can deliver, right from day one.

    I have in the past suggested a retirement income product designed to utilise (spend) the entire pot over the remaining (underwritten) lifetime of the policyholder, allowing for a reasonable level of future investment growth, with a guarantee against total fund burn-out, on the basis that this should (in theory) facilitate a higher level of income than an annuity. Whilst such a product wouldn’t afford scope for future increases (not without periodic re-underwriting anyway), what it would facilitate is maximum income from day one. But no providers seem to consider such a product feasible. Prudential, for example, declared that the cost of the guarantee would be too great, even though the likelihood of it needing to be called upon would be fairly low and unlikely to crystallise for many years to come. But that’s actuaries for you.

    • I like your idea Julian but I think it should also come with a unicorn and it should weed my garden for me.

      What you are basically describing is an annuity but without mortality cross-subsidy or the economies of scale that come from aggregating all the annuitants’ pension funds. I.e. even worse rates.

      • Julian Stevens 7th July 2017 at 3:19 pm

        Not at all. I have on my PC a simple capital drawdown programme. If you enter an initial fund of £100,000 with monthly withdrawals of £600 (6% p.a.) and average annualised growth of 5% p.a. it shows the residual fund after 25 years will be £50,374. Such a figure allows a pretty wide safety margin for shocks along the way. Of course, it would never be quite that simple in practice and there would have to be charges BUT, with a Steady Eddy fund such as one of Prudential’s smoothed returns ones, I don’t see why it shouldbn’t be feasible.

  3. Not surprised, shows the level of commitment that these ‘players’ have to consumers!

    Always felt that they may take flight for some reason…disappointed to find that I was correct!

  4. @Julian Stevens Not quite what you’re proposing but have you considered Copia’s Retirement Income Porfolios?

  5. Seems the Americans continue to like what they see here in the UK but cannot stay the course. AIG, Amex and now MetLife. No doubt I’ve missed out others but companies wonder why we tend not to be impressed when they call on us.

    • A few years ago I had the temerity to criticise the Met Life offerings in this journal, only to have one of their big bananas haul me over the coals for doing so.

      As Kevin has so rightly said the Yanks come here with big ideas and braggadocio only to run off after a few years with their tails between their legs. (You forgot the Hartford and Chase Manhattan). Their products are often of the ‘snake oil’ variety and not too popular in the UK – as has been evident!

  6. Matthew Lynch 7th July 2017 at 3:53 pm

    Edward Jones is another example for the IFA world. Morgan Stanley on the retail side.

  7. Sadly this news backs up my concerns about MetLife, which is that they are toe-dippers in the UK market and are not fully committed.

    And if MetLife can’t run this type of product profitably, can anyone?

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