FR: What have been Selectapensions’s biggest milestones over the last year?
The last year has been about developing our latest module ‘Asset Reviewer’ which is a ‘compare the market’ type system for investments. However, this new tool doesn’t just stop there as it includes an asset allocation engine, an option to remodel funds within the current product, look at the tax implication if any, compare product features as well as looking at an array of new investment products.
The amount of research and development that has to go into building such a tool is enormous. The design stage took around six months to complete with a further 4 months on building the market products from an accuracy point of view, coupled with the months of on-going testing. The milestone of delivering the tool on schedule was achieved as a result of lots of hard work.
FR: Do you think brokers underestimate the value of technology in their day to day business?
Intermediaries have had to change their business models in line with technology over the past ten years or so. However there will always be some practices that are more switched on than others as technology provides efficiency which in turn saves money when producing cost effective advice and service.
FR: What do you think about the FCA’s review of annuities?
I think this is long overdue! The FCA review of annuities found that 8 out of 10 consumers who purchased an annuity could have got a better deal on the open market, which says it all. Selectapension has been involved in post-retirement planning for the past 6 years when we introduced our Income Drawdown calculators to the market in an attempt to aid intermediaries on post-retirement planning and the associated advice. There is definitely a greater need to help the consumer on the entire cycle of pension planning and the FCA review is aimed at helping address part of this area. However, the solution to this isn’t as simple as we think. We have to bear in mind RDR brought about change in the marketplace in regards to intermediaries commission which will undoubtedly affect some consumers who are reluctant to pay up front fees for advice. This will only continue the problem of ‘non advice’ at such a crucial time in the pension planning process.
FR: How do you feel the new lifetime allowance will change the market?
The new limit of £1.25 million from April this year will obviously affect more people (especially the High Earners) who have built up substantial pension pots over the years and these will need to be scrutinized throughout the term of the pension. Minimising a potential tax charge should be high on the list of priorities when it comes to both pension planning and much needed pension reviews.
In my opinion, there will be some consumers that will unfortunately not get the appropriate advice through lack of reviews and consultation, not just because of recent industry changes (RDR), but also through a lack of professional knowledge when it comes to the lifetime limit and the protection available on benefits accrued before 6 April 2006.
Selectapension’s retirement planning tool takes into account the existing LTA and this new limit will be adopted accordingly. In addition Selectapension’s QROPS tool will highlight that pension transfers will be tested when considering transferring to a qualifying recognised overseas pension scheme (QROPS) which hasn’t changed, albeit for the reduced LTA.
FR: What advice would you give to anyone looking to start up in the industry?
My advice would be – know your customer and know the market! The industry needs to maintain the same levels of intermediaries out there today, if not more. Financial planning is key to the consumer and with the amount of changes in legislation, the industry’s desire to provide low cost products and less remuneration for the intermediary, this is certainly ‘food for thought’ when considering starting out in an ever changing arena.
