Aviva overhauls declining advice proposition

Jenna Brown reports

Aviva Financial Advice is “absolutely committed” to the sector despite fluctuating adviser numbers since its inception in 2016 and a full-scale strategic review which refocused the business, its managing director has said.

Mary Harper said the life company’s advice arm’s original at-retirement focus was “too narrow” and, now, the restricted business is establishing a whole of wealth advice remit delivered in a variety of ways following a business review. The insurer’s advice arm, she added, is in the midst of setting up a simplified advice operation set for launch this year.

Aviva re-entered the advice market in 2016 with the aim of filling a gap in the market created by the Retail Distribution Review and the opportunity presented by the introduction of pensions freedom, which removed the almost universal requirement to buy an annuity at the point of retirement.

The advice business started out small with 12 advisers and, during the next few years, its ranks shot up to more than 100 advisers. But now, after a review full-scale strategic review conducted in July 2020, operates with 28 advisers.

Harper, MD since January 2020, explained: “We found our proposition that we had built was too narrow. We weren’t able to meet all of the needs that they were approaching us with.

“We went from 12 to 100 and then we had a bit of a ‘foot on the ball’ moment and thought about what do we need to do here to be able to respond to what our customers are asking for. We refocused the shape of the business to more effectively meet that demand.

“We have learned a lot over the past four years about different customer needs and we are tailoring the proposition accordingly,” she continued. “We do have fewer advisers but it has enabled us to support greater needs elsewhere in the proposition, in our back office, through different price points and efficiencies.”

Over the long-term the business planned to regrow adviser numbers, Harper added, but would not be drawn on a target.

“We have a programme where we have refocused the business and put those capabilities into place but the idea is that we will grow again. We want to get those foundations in place before we grow but we will grow our adviser numbers again.

“We have been on a journey for the last four years. We have closely scrutinised what is the right model and we are really busy putting those foundations in place. We have a growth story. It [advice] is a really important part of our mix.”

Broader remit

Harper said the restricted proposition was laying the foundations for a whole of wealth at-retirement service – with a broader remit for advisers to factor in not just pensions wealth but other assets as well.

“That will give our customers a broader menu of services that includes things like abridged and simplified or transactional advice, so not only is that a broader menu of propositional services it offers a wider range of price points,” she said.

Aviva joined the likes of SJP and Quilter in offering abridged advice – a condensed service linked to whether it would be in a client’s best interests to transfer out of a final salary pension scheme – in November last year. The price for the service is £800.

It will also offer simplified advice, which is still in its “experimental stage”, according to Harper, who also said broader wealth, a renewed focus on defined benefit transfer advice (as evidenced by AFA joining SimplyBiz’s DB transfer panel in January) and inheritance tax planning would be on offer as well as a shift to digital.

“I think Covid has taught everybody a lesson on the fact that not everything has to be face to face, it has accelerated that digital agenda, not just for advisory firms,” she said.

“Digital allows for a much more efficient process overall. It is partly about efficiently and but also about customer choice on how they want to engage. It won’t replace face-to-face completely but is absolutely on our agenda.”

Vertical integration

The industry trend towards vertical integration continued in mid-January when Fidelity launched its own advice arm, with similarly small adviser starting numbers.

Harper said the perception of vertical integration is often seen as competing with whole of market advice but the propositions “can be complementary in some ways”.

“With vertical integration, you could argue customers miss out on better options but customers aren’t disadvantaged if the restricted or vertically integrated offering is equal or better quality to the broader market offer.

“Specifically within AFA, we are very clear that we only offer Aviva products. Where we think the customer’s needs would be better served we refer them to whole of market advice.

“Other benefits of vertical integration, for me, is the scale and efficiency. Arguably customers can benefit from cheaper charges, more flexibility in pricing options.”

She added: “Larger vertically integrated businesses have greater ability to invest in things like adviser training, robust governance programmes, better digital experiences to improve the customer journey.”

She also argued the existence of vertical integration and whole of market services give the end-user, the customer, greater choice.