Andy Oliver, regional director of The Annuity Bureau, talks to Christopher Salih about his route into financial services from the army and ensuring his clients get the best possible deal for their retirement
How did you get involved in financial services?
I got into the industry in 1995, prior to which I'd been in the army, spending seven years with the parachute regiment - in places like Northern Ireland, Bosnia, Botswana and Kenya, which was great. While Northern Ireland was in the midst of some turbulence when I visited in the early 1990s, Bosnia was by far the most dangerous place I went to as it was in the middle of a war.
I spent my time there in Mostar, a peculiar city in the south of the country, which, despite being ignored on the grand scale, was in the midst of a mini-war between all three factions - the Serbs, Croats and Muslims. I worked closely with the United Nations Civil Affairs Team and my two claims to fame are that I helped initiate a peace process in Mostar with Civil Affairs and I also helped install a mobile hospital into the Muslim quarter.
Why did you leave the Army?
I'd been injured by some shrapnel in my ankle and I'd done all the things I wanted, such as travel. I was in my late-20s and was looking at spending the next six or seven years sitting behind a desk, so I chose to embark on a new career. That career became the pensions industry when I was employed by Equitable Life as a company representative.
What have you learned about the industry en route to The Annuity Bureau?
Equitable Life's biggest asset was the way it managed the development of people. In terms of getting me up to speed on things like regulation, legislation, sales skills, products and so on, it was a fantastic learning ground.
I took a particular interest in the retirement market and moved to Britannic Retirement Solutions, where I worked with an extraordinary guy called Mike Fuller, who now heads up Just Retirement. I learnt masses about how to build a company - not to mention gaining further understanding of the retirement market in detail. That was a huge education as well but in a much more niche area.
Then at Bank of Scotland I ran various sales teams and operations. However, the focus was always on expanding in the retirement market, particularly in the areas of estate planning and income at the point of retirement. While that groundwork was taking place I was also slogging my way through an MBA at Henley Management College, where I worked on strategy, human resources, operations, finance, marketing and IT and information studies for the first year, before coming back in the second to learn how to mould all of these functions into a cohesive business strategy.
When I finished that course, I felt the time was right to go to somewhere like The Annuity Bureau and help enhance its reputation in the market place - as well as its horizons.
How is The Annuity Bureau structured?
It was an independent company until the beginning of 2004 when Alexander Forbes bought it for a number of reasons - its brand, its people and its broad database of business connections. Its weaknesses at the time were that it was very narrow and blinkered - all we did was annuities, meaning we were overexposed to market movements. For example, pre-A-Day, the market slowed dramatically and, because our core competence, strategy and brand recognition were all annuities-oriented, we suffered.
I head the team up and have a top-drawer management team around me, which is important because one person can't do that much in this industry on their own. There is sales manager Peter Magliocco, business development manager Georgina Denny and Gemma Goodman, sales support manager. We have 15 advisers on the ground, with another five about to join, and we also have a two-to-one sales- support ratio.
Why did Alexander Forbes recently launch an annuities supermarket?
It is mainly about making people aware that they can get a better deal and also aware of what type of deal they can go for.
If we measure the difference we get in terms of the average increases from pensions - and we can look at the figures from 1 October 2005 to 5 October 2006 through our system - the average increase in that period is 14% extra income per year. We ask people what their current provider offers and what they could get after searching the market and finding that sort of rise.
What that ignores, however, is impaired life annuities, which are a major factor in the industry. A standard annuity will offer someone a guaranteed amount for the rest of their lives, with that capital in gilts. But this is calculated on life expectancy, so if someone comes to us with heart disease or diabetes, then typically they aren't going to live as long as a healthy 60-year-old.
Now, on the normal chart, those who die before their life expectancy is reached then subsidise those who live past it. But impaired lives are taken out of this pool and placed in an individual pool. So if an insurance company says, instead of a life expectancy of 82, it's actually 74 because of an illness, instead of 22 years to spend the same amount of money, they've only got 14 and they are placed in a separate pool that works on the same basis.
That 14% difference I mentioned early is only based on healthy lives at 60, because if we included those with impaired lives, that figure would then rocket and ultimately be misleading.
Do you offer alternatives to annuities?
We do, but there are various different types of annuities. There is a conventional gilt pack, impaired, with-profits, unit-linked, investment-linked and also flexible annuities. This gives people various hybrids and investments. As an alternative to annuities we offer insured USP and secured pensions, formerly known as income drawdown, and also Sipp drawdown as well.
That is because some people want something different - it really depends on what people's objectives are. Our approach is effectively to ask people what they want to achieve - and the vast majority want something that is secure, known, reliable, with no variation and is 100% certain, which is what a conventional annuity does.
But some people wish to have flexibility or slightly different death benefits and they accept more risk. Part of our sense check when we discuss alternatives to conventional annuities is to assess whether, if things go wrong and investment returns take a dive, the client can then withstand having their income reduced. If they say yes, we progress further.
How important is your 'value for independence' banner?
It's huge. If you go to a tied agent, or accept what your seeding scheme is offering, or choose to go to a provider off-the-page, then you are limiting yourself to one rate. If you come to us we can guarantee you one thing - you're not going to be any worse off than you are at the moment. You might be lucky and have the provider that's offering the right rate for you, and we can simply confirm that. The chances are, however, that by coming to us we are going to find something different. If I turned around to one of my staff and offered them a 14% pay rise for the rest of their lives they'd probably snap my hand off. What does annoy me is that people will spend hours researching car, contents, building or holiday insurance, where you might save £20 a year, yet here we're talking about thousands of pounds over the course of a lifetime. It's a one-off decision and they don't do it.
Are you wholly fee-based?
We are both fee and commission-based so people can choose how they wish to remunerate us. We don't mind how we get paid - our process is to ensure customers are treated fairly and that the whole process isn't fruitless.
Why have someone with a small amount of money having to wait 15 years to recoup the fee they pay to us for advice? Fees aren't logical for everybody. It depends on how much advice, hand-holding, guidance and support people want.
How much will TCF affect you?
My interpretation of TCF is ensuring a good client experience right the way through the advice process. Did they get the right contract? Were the customer service levels there? And did they understand the risk and feel satisfied they worked in a partnership as opposed to being sold something?
If you can demonstrate that, then you've treated customers fairly. I want to be able to look a customer in the eye and say we did absolutely the right thing for you. If we do make mistakes - and every business does - our aim is to put them right straightaway.
Do you have a training ground for advisers?
There is a training unit within Alexander Forbes. Our process begins with ensuring potential advisers have suitable qualifications for the role then, once selected, they are mentored for a month by one of our existing advisers. That monitoring is meticulous as every piece of work and every phone call is checked. We then put them in an eight-day training programme on how to treat people correctly, with role-plays and assessments to round off their advice skills. We continue to monitor those advisers 100% for a minimum of four months and may continue, depending on their progress.
What tip would you give to advisers joining the industry?
First, keep asking questions of the client to understand what they want to achieve and ensure the right contract is advised as this will help them understand what their task is in this particular set of circumstances. Advisers should also always challenge themselves to go to a different provider to see if they can find a better rate. There is always something out there that is better and easier to use, the challenge is finding it.
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