A straightforward, good-value, people-led proposition, underpinned by good processes and technology, is helping win over corporate advisers, says Platforum senior researcher Miranda Seath
In many ways, Royal London is a life and pension provider swimming against the tide.
It isn’t interested in digital bells and whistles or buying up advisory firms. Indeed, group chief executive Phil Loney has hit out in the press at vertical integration, a practice he feels is selling the consumer short as it drives a decline in what Loney terms ‘impartial advice.’
Some may deem Royal London traditional but the fact that it is sticking firmly to its knitting resonates with advisers and employers. It offers a people-led service that gets it right first time, underpinned by good processes and technology. In Platforum’s Workplace Savings Guide, Royal London received the highest rating for its workplace proposition.
The provider’s corporate pension proposition is simple: it offers a GPP, a group stakeholder pension and a CIMP. If employees want drawdown, they must move to a different structure.
Royal London has a range of default funds that are, in practice, governed portfolios. The majority of funds are managed by RLAM but it also works with ‘high-quality’ external fund managers, overseen by the investment advisory committee. Royal London does not advocate open architecture; instead it concentrates on offering a good default range and, beyond this, a large but vetted range of funds.
Royal London’s independent governance committee was the first to report, tackling charges and penalties levied on members with legacy workplace pensions. As a result, by September this year there will be a reduction in charges on legacy contracts of 20 per cent. Regulatory headwinds are forcing IGCs to take action to safeguard members with legacy pensions but Royal London took the initiative.
It received the top score for administration of automatic enrolment schemes, an area in which it has invested heavily. This strategy means Royal London is well positioned to pick up business from employers choosing to stage for the second time. For those burned by AE glitches first time around, Royal London looks like a safe pair of hands.
However, an important area for development is the automation of its scheme set-up process, which would further improve its chances of winning new business.
Royal London focuses on small to mid-tier employers. Combined with the fact that it has no GSipp or corporate Isa, this means corporate advisers are the main route to market. The provider requires average employee contributions of £1,500 annually and will not consider employers phasing up from 1 per cent minimum contributions.
When we spoke to advisers, some were critical of certain providers that they felt made baffling decisions to reject schemes. If Royal London seems a bit choosy, at least advisers know exactly what to expect.
A people-led service costs more to deliver than a self-serve approach but Royal London is regarded by advisers and employers as good value, with an above-average rating for costs and charges.
Significantly, it also received our top rating for ‘ease of use for employees’. Employers tell us that, where a firm’s service is poor and its website opaque, the burden of helping employees falls on the HR team. So Royal London’s score here is a big tick in the box.
The provider’s clear focus on pensions and its sense of purpose translate into confidence in its proposition and service. With the prospect of choppy waters for pension saving, we shall follow Royal London’s response with interest.