Insights for May-24
On my mind this month
The UK’s Ageing population and Financial Advice
The growing ageing population in the UK is not new news, but the impact of this dynamic is being felt more than ever as we navigate this transition. There will be an additional 4.5 million individuals aged 55+ by 2040, and the number of individuals that turn 65 in each year is going to grow from c.700k in 2023 to 850k in 2030. Therefore, retirement advice and retirement income have become the next big thing in the financial advice community. Fifteen years ago, retirement advice was provided by a small number of specialists, such as Mattioli Woods, however, today the retirement income market is a significant size and every financial advice firm must have a pension advice proposition ready. How difficult can retirement income advice really be? A recent thematic review by the FCA confirms that it can be very complex.
FCA’s review highlights fundamental issues relating to quality and performance
The review shows a very mixed picture with regards to quality and performance across firms participating in the survey. The results identify fundamental issues such as (i) some advice firms had not adjusted their approaches and thinking to the post-pension freedom landscape; (ii) several firms were not taking account of the differing needs of clients in decumulation as opposed to accumulation; (iii) instances where firms had not provided the right information to support their customers to make informed decisions; (iv) poor documentation, insufficient suitability testing and missing documents; to list only some of the issues identified by the FCA.
The review also highlights what are considered to be good practices, such as (i) use of a Centralised Retirement Proposition (CRP), similar to a Centralised Investment Proposition (CIP), (ii) the use of withdrawal guide rates to ensure consistency; (iii) deployment of cashflow modelling tools; (iv) a robust approach to risk profiling that is adjusted to decumulation, including ATR (Attitude To Risk) and CFL (Capacity For Loss); (v) appropriate information collection that is aligned to customer needs and avoids unnecessary or excessive charges and penalties. All these points seem to be common sense in a client-centric service culture, but many firms failed to demonstrate that these are deployed consistently.
Challenges ahead, but the reward is worth it
The review clearly highlights that the financial advice community not only needs to address consumer duty, but that many providers have their work cut out for them, to stay ahead of the game with regards to retirement advice. However, it is worthwhile, as the need is significant, the generation retiring now is the wealthiest ever, and catching consumers at the beginning of their decumulation journey can provide long-term relationships with significant future customer value.
This month, we have a newsletter full of insights:
1. Understanding the Payments Industry and Investment Opportunities
2. What’s Next for FedNow: Future Impacts and Predictions
3. Commercial Insurance Broking – Is it time to move on from retention rates?
1. Understanding the Payments Industry and Investment Opportunities
At its core, the process of making payments fuels the economy, offering a fertile ground for investors with its sustained market growth, minimal capital requirements, and opportunities for creating enduring competitive edges. Despite its significance, the mechanics behind how payments function tend to sound overly complex when described, often painted as a tangled network of intertwined systems, procedures, various layered solutions, and a confusing mix of participants and jargon. This complexity creates an illusion of impenetrability
In this article, we aim to demystify the workings of the Payments sector and provide a high-level overview of the investment opportunities across the payments landscape.
Authors: Richard Mould Douglas King
You may also be interested in:
·??????? Consumer Credit: The Complain Game
领英推荐
2. What’s Next for FedNow: Future Impacts and Predictions
The launch of the FedNow instant payments service could have a significant impact on the financial services and payments infrastructure as real-time payments become a critical offering for businesses and consumers. This article explores the widespread implications of FedNow’s 2023 national debut and its continued scaling over the next decade.
This is the third instalment of our three-part series exploring the monumental impacts of the Federal Reserve’s new FedNow instant payments service. If you haven’t already, go explore:
Authors: Gigi Wong Sam Shinner Stanley L. Devin K.
3. Commercial Insurance Broking – Is it time to move on from retention rates?
For decades, the insurance broking industry has relied on a limited pool of key metrics of which new business, retention rate and commission are core and have served businesses well. However, the market today is very different to what it looked like a decade ago as the influx of private capital has transformed the scale of businesses, the level of competition, and sometimes the mode of growth. This is complemented by deployment of technology and access to data at a scale that is unprecedented in the sector. Given these changes, it is time to consider the best ways to understand business performance that allow for targeted action and measurement of cause and effect to allow for more sustainable, organic, value creation.
Authors: Sam Halliday Ashish Khanna
Popular publications
Connect to our thought leaders
Ashish Khanna, Peter Ward, Eilert Hinrichs, Sam Halliday, Bronswe Cheung, Douglas King, Richard Mould, Gigi Wong, Sam Shinner,?Clayton Souza, Felipe Ahouagi
L.E.K. Capabilities
The L.E.K. financial services team helps clients develop fact-based, practical, winning strategies for our dynamic sectors. Our work for investors, shareholders and leaders brings insight and a rare breadth of experience and perspective to drive strategic decision making.
Performance & Digital Marketer - User Acquisition | Retention | Revenue | eCommerce & App Marketing
6 个月Thank you for sharing the May newsletter, filled with valuable insights. I look forward to diving into the strategic topics discussed. Subscribed and ready to engage further.