A focus on younger clients and reformed distribution channels were among the proposed solutions to the “stagnating” market, after the Association of British Insurers revealed that sales of single premium offshore bonds had fallen to £881m from £981m in the final quarter of last year.
Head of proposition at Axa Wealth, Simon Willoughby, proposed targeting younger clients as a resolution to the poor figures, also down £129m on the first quarter of 2013.
“We need the sector to begin targeting those who are young and ‘income rich’ rather than those who are retired, or reaching retirement, and making large lump sums of cash off previous savings,” he said.
He added that the changes to annuities and pensions in the Budget have shifted the “tectonic plates” of the industry, moving the focus onto the tax efficient accumulation of wealth, predominately present in younger clients.
“The average age of a client is 60 but we want to target high earners in their thirties.”
However, Richard Leeson, chief executive at Adviser Advocate and former Axa Wealth International marketing director, said companies including Aegon and Canada Life have already tried to target younger clients but failed to impact the market.
He said that improving the online systems used by advisers would save time and money in a post-Retail Distribution Review environment.
“Innovation is always needed. People need to change their business models or clients will start to walk away, it is a case of changing products to fit distribution channels,” he said. “Time has become money since the implementation of RDR, and complicated, poorly performing, online products waste both client and adviser’s time and money.
“A lot of effort will go into improving online capabilities over the next year as advisers continue to adapt to a new regulatory environment.”
Similarly, managing director at Canada Life International, Sean Christian, said the solution to ailing sales lies in improving distribution rather than developing new products.
“We shouldn’t underestimate online capabilities which deliver efficiency, because making things easier for people will lead to a more mature industry,” he said. “Not everyone will come up with a new product but there will always be opportunities to improve distribution.”
He said the market will partially recover over the year because of an increasing demand for estate planning products.
“The industry has always had its ups and downs but sales will recover,” he said. “The main growth area is estate planning, so those companies which have a wide support of these products will do well financially.”
Similarly, regional sales director for UK, EU and LatAm at Friends Provident International, Irvine Baxter, predicted an increase in sales over the year as improvements in the economic climate “filter through” to clients, giving them greater asset values.