Fortune favours the brave, as the saying goes. Ask Selectapension managing director Andy McCabe. Nearly a decade ago, he gave up his job at Legal & General and remortgaged his house to start his own business.
“When I set up Selectapension I was working at L&G on its pension transfer system. Financial advisers could use this to look at moving money or increase contributions, but it was only for L&G products. There was a need for a cheap online system which had everybody’s products on it. A compare the market type of system.
“I thought I’ve done that for L&G and they’ve done well but it’s time to move on and I’m going to take a punt on this. I put my house on the line – and it was scary,” says McCabe.
Luckily the risk paid off – Selectapension, which provides online financial planning tools, now has more than 3,000 users. But McCabe, who has 25 years’ industry experience under his belt, is more cautious these days.
“I don’t think I’d take the gamble again, now I’m nine years older. There’s the chance of failing and its also a money thing.”
Since its inception in 2004, Selectapension has focused on retirement planning as this has been McCabe’s area of expertise. He says keeping on top of technological innovation and understanding legislative changes are crucial.
McCabe is supportive of some changes such as the introduction of auto-enrolment, which he feels has brought pensions to a new audience. He is optimistic about pensions in general, despite planned changes for April 2014 that will reduce the standard lifetime allowance to £1.25m and the annual allowance to £40,000.
“These reductions will discourage some people but on the whole I think pensions are on a high. You are always going to get things that crop up and have a negative impact on pensions. It has happened all my life; there’s a spike up when this is good for pensions and a spike down when that is bad.”
But he is not a fan of the RDR. “The RDR is a big question mark. Joe Public won’t get the right advice because people haven’t got the money to pay the fees upfront. Advice is the most important thing, but there is so much advice that could be given that isn’t. I like some of the fee structures advisers are implementing, but not everyone can afford it.”An
This lack of access to advice is particularly acute at the point of retirement says McCabe.
“Post-retirement is a vital part of retirement planing – should you lock in to annuities or look at phasing? There are so many things you have to consider. Is it best to go for phased retirement or drawdown? There is very little advice.”
Drawdown in particular is under-used as a retirement option.
”How much do advisers know about drawdown? Some shy away from it but a minority do get involved in drawdown. Hence why Selectapenion does a lot of promotion for drawdown through seminars and workshops.”
At the start of his career McCabe wanted to emulate his late father, who was an underwriter in the City.
“My dad started out as a broker then became an underwriter. He was very influential – he had a key to the city, which meant he could have been Lord Mayor, but he died when he was only 48. I was inspired to be like him; I wanted to be office based. I had job interviews with Lloyds of London but it wasn’t for me.”
Instead, McCabe got to grips with the technical side of pensions as an administrator for Brighton-based broker Bateson and Payne.
“I was one of those people who stayed in the office to write reports. I got involved in pension transfers in 1990 and that was a complex area, especially as I had no previous financial experience. But I did have a diploma in business, which I think makes you a bit smarter,” he says.
A role as a pension transfer analyst with Colonial followed. He spent his weekends working for the pension review team, calculating losses incurred by people who had been mis-sold pensions.
“I had three jobs in one at that point – pension transfers, a review expert and marketing. I came up with the idea for how best we could make the calculations and do the reports. I helped to design those systems,” says McCabe.
When Colonial was taken over by Winterthur, McCabe decided to move on rather than accept the role of SSAS manager at the merged firm. “I got a job as marketing manager with L&G, where I had high hopes and ambitions. I’m not a coder or developer, but came up with the concept for a system that financial advisers could use to produce reports based on L&G products,” he says.
McCabe has taken that basic concept and built on it. Selectapension is branching out in to investments from January with the launch of an asset reviewer tool. Given that the firm says around 98 per cent of its users are interested in investment planning, this move seems inevitable.
McCabe says: “There are Isas, bonds, overseas investment, savings plans – but how do you know its the right plan for you? We are targeting asset allocation, with a compare the market type of service. This tool has been in demand for years but nobody has done it.”
Born: Hemel Hempstead
Lives: Near the Ashdown Forest in East Sussex
Education: Lewes Technical College & Open University
Career: 2004 to date: founder and managing director, Selectapension; 1999-2004: pensions marketing manager, Legal & General; 1994-1999: pension transfer manager, Colonial Mutual; 1990-1994: pension administrator, Bateson & Payne IFA
Likes: Spending time with the wife (without the children), spending time with the children, playing golf and watching Chelsea dominate in Europe. The odd glass of red wine after a busy day.
Dislikes: Dishonesty and Manchester United
Drives: Freelander 2 ( the sporty version!)
Book: The Lord Of The Rings (must have read this five times as a boy) and Stephen King’s It
Film: One Flew Over The cuckoo’s Nest and Star Wars
Album: Tourist History by Two Door Cinema Club
Career ambition: To produce a one-stop-shop software package that benefits the financial sector and consumer.
Life ambition: To enjoy what I do and never look back
If I wasn’t doing this I would be…. Possibly in management accounting