View more on these topics

Royal London boss: Mandatory drawdown advice ‘a potential solution’

Cyber Security

Royal London chief executive Phil Loney has said that mandatory advice on drawdown could be a “potential solution” to problems in the market as he hits out at how providers treat non-advised clients.

Speaking with Money Marketing, Loney said that the company was worried about how customers in the back books of long-established pension companies are being offered only in-house products when they go into drawdown without advice.

Loney likened the situation to where customers were being offered second or third quartile annuity rates by their existing providers.

Asked whether he would favour mandatory advice on drawdown to address the issue, Loney said: “You could do that. Generally speaking, it’s difficult to get to that point because of freedom concerns but that might be a potential solution.

“If you don’t go down that route what I’m envisaging is something like what you have in the annuity market. You write to the customer thinking about an annuity, and rather than in-house, you send them to a website where they can get the range of rates across the marketplace to get the best deal for them. There’s no reason that can’t work for drawdown.”

The FCA has previously told Money Marketing that mandatory drawdown advice may not be suitable for those with smaller pots.

Loney said the firm still had no plans to offer its own advice.

“We think the best type of advice is impartial advice. It makes sure the customer gets a clear recommendation about what they should do, and figure out what the problem is they are trying to solve sometimes. It looks across the market for the best product for them. That’s why we don’t want to vertically integrate ourselves.”

Recommended

5

Sanlam takes over 158-adviser network

Sanlam has acquired Tavistock’s financial advice network, Tavistock Financial. The deal adds 158 advisers and 25 staff to Sanlam’s current 60 financial planners. It will also add £1.5 billion to Sanlam UK’s assets under advice. The move is part of South African listed Sanlam’s bid to build a bigger advice presence in the UK by restructuring […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Robert Milligan 17th August 2017 at 3:47 pm

    Mandatory!! Absolutely, and not by a Product Provider Incentivised/Remunerated/Vertically Integrated Sales Person

  2. Anthony John Etkind 18th August 2017 at 12:12 am

    Any decent IFA will have plenty of clients without needing to be fed mandatory drawdown clients. What will you suggest next? Will all bank and building society savers and stockmarket investors be mandated to take financial advice? Please. Let individuals be allowed to make their own decisions. Just ensure that the scammers are eradicated.

  3. Other than for people whose aggregated retirement funds are less than £30K, OM should be the default option and, apart from those based on GAR’s, providers should be banned from quoting ANY annuities.

    Without advice, it’s almost as easy to buy an inappropriate annuity as it is to opt inappropriately for DrawDown. Let us not forget either the availability of temporary annuities which used to form part of Canada Life’s sorely missed Annuity Growth Account.

    Isn’t the new Advice Allowance intended to encourage people to take advice at retirement? The primary reason why take-up of it has been so poor is, I suggest, simple ignorance. Were Pre-retirement packs to state that independent advice MUST be taken but that most of the cost of it can be met from the fund itself, a lot more people would probably take advantage of it.

Leave a comment