Advisers ranked ‘product and proposition’ as the most important factor in pension provider service, Defaqto found in its annual survey of the market.
Advisers were invited to rank six areas of provider service, according to what they considered most important – provider strength and brand; provider staff; product and proposition; new business servicing; existing business administration; and online services.
‘Product and proposition’ topped the list this year with ‘new business servicing’ coming second. They ranked 6th and 5th in 2015 respectively. The report suggested this “complete reversal” demonstrated how advisers are placing increasing importance on ‘feature-rich’ products that offer the flexibility to meet ongoing client needs.
‘Online service’ and ‘existing business administration’ were the two categories in which providers failed to meet advisers’ expectations. Defaqto said this could be a message for the pensions market that more resource should be allocated to these areas to avoid further dissatisfaction.
The findings were based on 280 responses from advisers on the service of personal pension providers. Defaqto collected their views on the service they receive from more than 200 providers covering discretionary fund managers, protection insurers, platforms, pension providers, and bond providers.
The survey also asked advisers to rank preferred pension products and providers. Defaqto found the most used pension providers remained largely unchanged from those in 2015 although Old Mutual Wealth broke into the top five in 2016 for adviser usage.
Royal London and Aviva Life & Pensions continued to be used most by advisers. Defaqto also found advisers were on average using 5.1 providers in 2016 compared to 2.9 providers in 2015, indicating they placed certain types of business with a wider spread of companies.
Drawdown products
Drawdown products, including hybrid and blended-annuity solutions, saw a marked increase in client recommendations from advisers. The report suggested this was down to consumers moving away from using annuities as a stand-alone solution in retirement, which was anticipated following pension freedoms. It said this could indicate a move towards drawdown – or a combination of the two.
Self-invested personal pensions also saw a surge in adviser recommendations, again indicating more consumers wanted to take advantage of pension freedoms by transferring defined benefit schemes or other ‘safeguarded’ assets to be reinvested for flexible future access.
Defaqto wealth and protection head of insight and consulting David Cartwright said: “Getting the pension product and proposition right and clearly communicated, along with the purchasing process from providers should be a given and to advisers these are the most important areas.
“But providers should consider all elements of service and allocate resource where appropriate to avoid dissatisfaction from their customer base and so adversely affect the adviser’s product selection.”
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