Steve Whalley, head of marketing at Aegon Scottish Equitable International, talks to Sarah Godfrey
Q: What's your take on the current global financial situation?
Obviously there's a lot of uncertainty and worry in the markets, and that's not unexpected. Most authorities are doing their best to put stability in place, so hopefully we are not talking about a major cataclysmic event. In terms of how well products can respond, insurance has some security - it is very well regulated and there is legislation in place to give policyholders protection. The best thing in difficult times is to stay with the biggest companies as much as possible.
Q: Are there any specific ramifications for the offshore life industry?
If you're talking about last resorts - that's the footing we're on, so it's natural at the moment - if it's an insurance company that's in trouble and becomes insolvent, there is a very good investor protection scheme in place. It's the best there is - better than for unit trusts or for bank deposits. Having said that, though, if insurance companies invest on your behalf in some of these assets, that investment protection is not in place.
In the very near future there will be Ailo documents to explain the position. It's a good time to be talking as an industry.
Q: Should governments be intervening to rescue the financial sector?
There is a general recognition that if the US government - who are the most hands-off by inclination - feel it is necessary to take action, it looks like the problem is serious enough for co-ordinated political action. It's not nanny-state meddling; it's very important.
Q: What is your current geographical focus and how do you see that evolving?
At the moment, in terms of Aegon Scottish Equitable International, the focus is definitely on the UK market.
We were established in Luxembourg in 1995 with the intention of hitting lots of European markets - there were opportunities in Italy and so on - but it was always our intention to be a major player in the UK. From a Luxembourg base we found it hard to compete with the Isle of Man, so we took the strategic decision to move to Dublin in 2002 - it's a better base than Luxembourg from which to serve the UK market.
Things have moved on in the last couple of years though, and Aegon SEI is being used as a base for providing variable annuities - or unit-linked products with guarantees, as I would prefer to call them - as seen in the launch of our 5 for Life product.
Now we are beginning to see Aegon SEI at the centre of Aegon group activity - Aegon's Spanish operation recently launched a variable annuity, which is manufactured from our Dublin base. So rather than Aegon SEI itself going into different markets, we are being used as a base for other Aegon group companies in Europe.
I'm confident more versions of 5 for Life will launch in the coming months and years. It's easy to think sometimes that offshore life companies are peripheral but Aegon SEI is a bit of a powerhouse at the centre of Aegon.
Q: What types of offshore products are seeing most demand at present?
Certainly the market is still dominated by open architecture portfolio bonds, of which our offering is the Wealth Management Portfolio. Within that area, a lot of people are currently investing as a way of wrapping offshore cash accounts - for a combination of tax reasons to do with the EU Savings Directive and the general volatility in the stockmarket.
That's still 80% of our business, but we are beginning to see 5 for Life getting ever more understood and adopted. It's the usual bell-shaped adoption curve, but we have moved past the early adoption phase into the phase where more people are beginning to understand it. In the current market volatility, enquiries have shot up as people look for a product with both capital and income guarantees.
Q: Should customers have access to the whole global fund marketplace through offshore products, or is too much choice confusing?
In principle, choice is a good thing. But insurance companies should do what they can to help advisers make the right selections.
So, for example, on our website, we have a Morningstar tool allowing advisers to access over 10,000 collective funds, which they can then select and rank on things like past performance, fund size or rating.
It's about giving advisers choice but aiding them in how to make the most of that.
Q: What is the biggest change you have seen during your time in the industry?
Having been around since 1980, I think the biggest change was the advent of financial services regulation in 1986. Since then there has been a continued drive to have a better industry - whether through better qualifications or things like Treating Customers Fairly.
It has meant the industry has moved more towards being a profession, though I don't think we're quite there yet - it's a journey. But it's a fundamental change. There are now not only more rules but a deeper understanding and knowledge of the whole industry, and that can be nothing but good.
From being around since 1980, I can understand that in a way that someone who joined the industry after 1986 might not.
Q: If you could change one thing now, what would it be?
I would get the level of knowledge and interest of the end customers up. Most people think financial services are a bit boring and scary, and we often don't help as an industry with the jargon we use.
I would like to see customers clear about what we are talking about and why it is important, and more knowledgeable and better able to assess what was in front of them.
You're making decisions that last for the rest of your life - and how well-off will people be in retirement if they leave it to chance?
If we could keep things simple, engage people and keep the jargon to a minimum, we might win more hearts than we do currently.
Oh, and world peace would be nice too.
Q: How do you see the offshore market developing over the next couple of years?
The first thing to say is it will depend on investment conditions - will appetite for equities come back? We're not seeing it at the moment.
Also in time the demographic message might get through; people will realise they are going to be living longer and will sort their plans out in accordance with that, and organise their affairs properly to have a good income for a long retirement.
Will we see an increase in the tendency for people to retire to somewhere warmer and generally be more geographically mobile? More and more people are buying abroad, but will that be more formalised?
These things tend to work in favour of the offshore market - though of course the way things are going at the moment, the cheap airlines that make these overseas properties attractive might not be around, and how do you get round that?
Q: What would you have done with your life professionally if you hadn't gone into financial services?
I think I would have been something around teaching or training. It's a rewarding thing to see people being or doing better as a result of their contact with you. Though I did also apply for jobs in retail, which is contact with the end customer in a way you don't get in the head office of an insurance company.
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