The major hurdles for providers developing new products are connecting with evolving consumer requirements, the difficulty of forecasting sales for new products in a changing market – and the risk of making mistakes and committing capital needed for product and system innovations while the market adjusts.
Part of that is driven by an increased focus on financial strength by advisers – 47% of advisers say financial strength is crucial in assessing providers and there remains an underlying concern among advisers about compliance risks when giving pension freedoms related advice.
AKG stresses that the majority of providers will need to offer drawdown in order to succeed and other organisations aiming to address the market such as platforms and asset managers will have to offer solutions designed for drawdown.
The challenges for adviser businesses include adjusting compliance and planning processes to fit the new-look market – and new products and services they plan to offer include cash flow modelling, income modelling and drawdown.
Matt Ward, Head of Communications at AKG, said:
“The pension freedoms story so far is of a relatively muted market which has still to find its pace and rhythm but we expect developments to gather pace during the second half of 2015 as providers adjust to new adviser and consumer requirements.
“As such we anticipate that 2016 will be an extremely interesting year indeed for the broad range of market stakeholders seeking to capitalise on retirement income market opportunities."
