This week’s L&G and Nationwide announcement which confirmed a distribution tie-up for pensions, investment and protection products is sure to create a stir within the industry. From a pensions point of view this move represents the first banking and life office tie-up for a while and would seem like a very logical and shrewd progression for these companies with the way that the distribution market is moving.It also brings together two strong and trusted consumer brands. Both L&G and Nationwide figured in the top 20 most trusted companies as selected by consumers in research carried out by GfK NOP for Defaqto’s Retirement Savings & Income report 2007. Defaqto asked 1,000 consumers to state which companies, from a pre-defined list of financial services and retail brands, they would trust with their retirement savings. Nationwide and L&G figured prominently, ranking 4th and 16th respectively.In the proposed distribution landscape mapped out by the FSA’s Retail Distribution Review, high street banks in the UK would seem to be set fair for key involvement in providing consumers with affordable access to savings advice and products.
The L&G and Nationwide announcement signals an early example of major UK institutions paying heed to the future of the distribution market and Defaqto would expect to see similar new deals announced or existing relationships embellished in this area.
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- Call comes following ABI’s qualified support for Personal Accounts -
In a recent press release (1), the ABI gave its support for Personal Accounts but only on the basis that they add to savings rather than undermine existing pension provision. This position is supported by consumer research (2) carried out for Defaqto’s Retirement Savings & Income report 2007 (3).
This revealed that 71% of those surveyed will be relying on the State Pension to provide them with income in retirement while 49% stated that they will rely on their employer’s pension scheme, 24% will rely on bank or building society savings and 22% said they would be relying on personal pension savings.
Matt Ward, Defaqto’s Principal Consultant for Pensions & Wealth Management and lead author of the report, stated that: “These findings underline the pressure on the Government to better encourage private pension savings and to deliver a successful Personal Account proposition, thereby alleviating future strains on the State system. They also confirm that employers will have a huge role to play in future pension provision in the UK.”
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Defaqto’s recently published ‘Retirement Savings & Income Report 2007 - A review of the individual retail pensions market in the UK’ (1) - shows that many consumers still trust themselves and their family and friends for advice on retirement planning.
Defaqto’s research (2) surveyed 1,000 consumers of which 27% stated that they trust their own judgement when it comes to advice on planning for their retirement, 23% trusted their friends and family and 12% trusted their spouse/partner.
In terms of professional advice, the research showed that overall 28% of consumers trust a financial adviser for retirement planning advice and 24% would trust their employers.
Lead author of the report Matt Ward, Defaqto’s Principal Consultant for Pensions and Wealth Management, stated that “The industry needs to find ways to build trust with the public and this will pay rich dividends in terms of both the amount of business generated as well as ensuring that people get the best advice in this vital area of their personal finances.”
Defaqto’s report also includes financial background information on key product providers 3 as well as data on the intermediaries’ preferred pension products, the evaluation of what is important to intermediaries in terms of product delivery and their assessment of the quality of service received by the principal providers.
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