ABI figures show sales of UK-distributed offshore bonds fell 25% in Q1 of 2012, compared with Q1 2011. How are Canada Life International’s sales holding up?
Last year was fantastic for us. It is common knowledge in the market that in Q3 2011 we received some large business – we had a market share of slightly over 30%.
We have a five-year strategic plan and we are two years into it. Part of that is to achieve a 20% market share, which we did in 2011, but it was distorted by Q3. Obviously we want to have a number-one offshore position in the UK.
Q1 this year, it is fair to say, was challenging for everybody. We are still on track for our five-year plan. Our retail IFA business is holding up incredibly well. Our larger institutional partners – banks, family offices, larger specialist wealth advisers – are undergoing change as they gear up to the RDR. They are creating their new models – whether they are independent, whether they are restricted, creating their service proposition and segmenting their client bank.
That is having an impact, but I am confident we will have good numbers flow through for the remainder of the year. We had a 14% market share in Q1.
Where are you seeing the strongest sales?
Our estate planning proposition is going well. We have a breadth of proposition, but also it is well supported. So we have a field-based team who are experienced in this market, but we also have a tax and estate planning team. They have got HMRC experience, they are STEP-qualified – and they are out in the market helping advisers in this area.
Sitting behind that, we have the technical resource that is available for people to use. The technical services team collectively have over 200 years of experience in taxation, trusts and estate planning.
That has paid us massive dividends as a business – we have invested heavily in it, and we have a strong reputation in that space. We also have ican, a tax and estate planning portal for advisers.
Are there any areas where sales have fallen this year?
No, apart from the general market conditions, we are holding up well. Our protection business is strong. We offer a whole-of-life contract and those numbers have held up well.
People are looking at diversifying their business, not only from pensions but investment. It ties in nicely with our estate planning proposition, because we do a lot of insurance for IHT liabilities.
Going back to the ABI stats, what were the key reasons for that industry decline in Q1?
We have seen a continual lack of investor confidence. But also I think the big piece is structural change for the larger institutions. So you have got structural change and people doing their gap-fill.
People are focusing on what their proposition looks like, and how they present that to the client – and that is taking real time and energy. I do not think the offshore market is out of step with any other UK market at the moment – if you look at every sector, it is challenging.
But I think offshore is an attractive proposition post-RDR – more so than many other propositions, apart from maybe retirement income planning. So I am confident the market will be buoyant and I think it will grow next year, even with the challenges.
Some people say the withdrawal of large banks like Barclays and HSBC from the mainstream UK advice market poses a challenge for offshore bonds. Do you agree?
Barclays removed their retail distribution, which in essence was a multi-tied sales force. But they still have Barclays Wealth, which is actively trading. So that is not disappearing, and that is a substantial business.
HSBC – their premier IFA division, as far as I understand – will be continuing. So they are going to have a presence.
Both entities will have a wealth offering. That suits us – our proposition fits nicely into that space.
Other commentators say offshore bonds are incompatible with RDR, because they have opaque charging structures. What is your view here?
It is an historic and unfair characterisation. I can move to RDR-compliant products tomorrow. The only thing I have to do to make my products RDR-compliant is facilitate adviser charging. If you take the product, I just have to remove an increased allocation option.
We have an initial charge structure that is … continues on page 2
