Royal London chief executive Phil Loney has said the provider has an advantage over its ‘more expensive’ rival PruFunds as he signalled a new strategic focus for the insurer.
Speaking to New Model Adviser®, Loney (pictured) said Royal London will unveil a new focus on the high-net-worth customer base in 2019 following its Ascentric replatforming project, which he still expects to complete by the end of 2018.
This will involve both its fund range, which includes Royal London Asset Management (RLAM), and its wrap platform Ascentric.
‘We have a huge franchise through our pensions business in the mass affluent market,’ he said. ‘We are much smaller in the more valuable, high-value to high-net-worth market. Once we have finished replatforming we have big expansion plans for both our wrap platform and funds in that space.
‘We see further growth coming in future years from more affluent customers and that is why we are prepared to replatform with our wrap platform and we will look to grow more aggressively [there].’
Loney said the firm already has a different platform strategy to other players such as Aegon and Standard Life, as it can offer clients an insured proposition which includes more than just an ISA and a pension but also an offshore bond or a funded share account. These extra insured products are more attractive to the needs of high-net-worth customers, an area in which he wants to focus more attention.
Mass affluent dominance
Loney said with the ‘mass affluent’ market, for customers that have fewer assets than the high-net-worth segment, Royal London is already the leader in that space along with M&G Prudential.
But he said Royal London has an advantage over Prudential in the space as the PruFund range is more expensive than its own products, including its Governed Retirement Income Portfolios.
‘If you look at the mass affluent market, it is probably us and Pru who are the leaders in that market,’ he said. ‘We already compete head to head with Pru in the mass affluent marketplace and the PruFund has a very good reputation and rightly so. But we think their product is much more expensive than ours and we think our Governed Portfolios are great value for money particularly when you look at profit share.’
‘One of the reasons our proposition is popular is most of our drawdown customers are paying 30 to 50 basis points (bps) for their drawdown and then they are given a profit share back from us.’
Loney’s comments came on the back on the mutual insurer’s half-year results, in which it recorded a pre-tax profit of £358 million.
Royal London's platform business, which includes national advice firm Succession's wrap and Ascentric, recorded net inflows of £612 million, exactly the same amount it recorded last year.