Over the next ten years, there will likely be a shift the nature of the pension consultant’s role, driven in part by a decrease in provider switching.
This was one of the takeaways from a panel debate at the Corporate Adviser Summit panel.
Gallagher CEO Nick Burns said he expected there to be less pension switching in future, partly because he says there is little differentiation between many of the main products. He said he expects the pensions and benefits consultancy sector to continue build their own products, gathering assets and driving an alternative method of revenue, while others may partner up which may possibly change the landscape of the market.
He said that this will lead to a decrease in pure consultancies, which he believes is already happening. Burns predicts that as established consultancies separate and carve out niches, consolidation will increase.
He says: “If the market does consolidate, you could become quite niche and perhaps there is more money to be made by staying niche.”
UK DC consulting leader and partner Gail Philippart highlighted that there may be a chance for businesses to specialise in particular areas with corporates looking much more broadly at things such as strategy, member outcomes, and financial wellbeing.
Ben Roe, the head of DC consulting at Aon UK, agreed that there will be an increase in specialised advice, but he pointed out that firms will likely compete on a project-by-project basis which he says is happening in the DB space. According to Roe, this will actually necessitate a focus on broader advice rather than just pensions.
He added: “I don’t think there are enough consultants to service the demand that’s out there.” Philippart agrees that there is a lack of people giving good advice to trustees and corporates.
She also highlights the fact that there will be movement in the switching market. Burns said he anticipates a decrease in provider switching because it’s getting more difficult to differentiate between them.