Aviva Friends Life focuses on winning new schemes through corporate advisers
Based on the findings from our Workplace Savings Guide, this month we take a look at Aviva Friends Life, the entity created by the merger of two life company juggernauts that began operating in April 2015.
The combination of Friends Life’s workplace savings book and Aviva’s consumer brand strength has the makings of a dominant force in the sector. We estimate that Aviva Friends Life has £45bn in workplace savings AUM, making it the largest player in the sector by asset size.
Aviva Friends Life offers two corporate savings propositions: Company Pension catering to the small and micro employer market (with a potential 1.8 million employers up for grabs, according to TPR data) and My Money.
My Money targets medium (defined as 200 employees and up) to large employers. The provider is also seeking schemes with reasonable levels of average contribution; advisers tell us My Money will not consider fully phased earning schemes and requires a minimum of 3 per cent/3 per cent contributions.
Employers can choose from a master trust, a contracted-in money purchase scheme or a GPP – in practice a GSIPP that allows the employer or adviser to restrict the fund range to insured funds. The pension scheme can also be combined with savings vehicles, including corporate Isas, on Aviva Friends Life’s workplace savings platform powered by FNZ technology. A range of 1,300 funds from 20 insured fund managers and 51 collectives fund managers is available through My Money. It operates a tiered structure consisting of: Tier 1 – a selected range of insured funds using Friends Life governance; Tier 2 – a fund supermarket of 1,200 funds (collectives and mutual funds); and Tier 3 – stocks and shares. Access to Winterflood is available on a quote and deal basis.
Three default funds targeting cash, annuities and drawdown have recently been added to the My Future default fund range and integrated flexi-access drawdown will be available through My Money from April 2016. Interestingly, Aviva Friends Life tells us that target date funds are also on its roadmap.
Whilst EBCs are a significant distribution channel for Aviva Friends Life, which has a spot on the Mercer panel, the firm says it is focused on driving distribution through corporate advisers. This is part of its strategy to win new schemes. With one-fifth of AE schemes eligible for re-broking thinking about switching, there is all to play for.
Our recent Workplace Savings Guide found that employers and advisers rated ‘ease of use for employees’ as the most important feature of a workplace savings proposition and Aviva Friends Life’s long-term ambitions should tick that box for staff with multiple Aviva products.
It is focused on rolling out horizontal integration using the My Aviva portal. This would enable members to see all accounts held with Aviva Friends Life through one interface.
This is an astute move. The portal is easy to use and looks polished. It should also help to drive engagement with workplace saving, a priority for bosses and Aviva Friends Life alike.
While Aviva Friends Life is taking its workplace proposition in the right direction, this appears to be going unnoticed. Our survey of adviser and employer opinion showed it lagging far behind top performers Fidelity and Standard Life on new engagement tools.
Aviva Friends Life must improve on getting its message out to employers and scheme members. More critically, it needs to drive up usage of its new tools. If it does not, its hard graft could be in vain, which would be a crying shame.
Miranda Seath is a Senior Researcher at Platforum