Speaking at the release of the insurance firm’s Q4 numbers, Adrian Grace, UK chief executive, said assets in advised drawdown rose 88% “as customers and their advisers took advantage of the reforms”.
He added: “Advisers are set to benefit from an advice windfall as market conditions build to deliver a pension perfect storm.
“Next month’s Budget could see significant changes to pensions tax relief, adding further demand for advice, particularly from higher rate tax payers looking to optimise their savings. Combined with one of the most volatile starts to the year in recent stock market history, the value of advice to balance security with flexibility has never been greater,” he said.
During the quarter, Aegon UK added £900,000 ($1.3m, €1.2m) in platform assets, which took the total at the end of 2015 to £6.4bn, more than double the £2.7bn level held at the end of 2014. Over the same 12 month period, clients on the platform rose from 58,252 to 243,000.
According to the firm, the net flows into the business were mainly driven by upgrading existing customers.
“The average size of new advised individual policies on the platform, including those customers that chose to upgrade, was approximately £51,000, more than double the amount for the traditional book of pensions and investment bonds,” it said.
Earnings flat
However, while sales rose, earnings stayed flat at £19m for the second consecutive quarter.
The main reason for this was a 33% year-on-year drop to £13m in earnings from its life book. This fall was the result of a “conscious decision to de-risk its investment portfolio to improve Aegon’s capital position under Solvency II and lower earnings from the direct marketing business.”
Earnings from its pensions increased to £5m, as lower expenses more than offset the impact of lower fees, the firm said. This number included “a benefit of GBP 4 million primarily related to a reserve release resulting from market movements and higher lapses.”
Fee income, however fell 10% on the back of lower margins, the result, the firm said of its strategy to upgrade customers to its platform proposition.
“Fee revenues from the platform were up 24% in the fourth quarter compared with the third quarter of 2015 and more than doubled compared with the fourth quarter of 2014, driven by to the strong increase in assets under administration,” the firm said.
At a group level, net income grew to €478m in the last quarter of the year, impacted by lower earnings in the US, but helped by growth in net recoveries and lower fair value losses.
The firm also saw a 63% jump in gross deposits within its asset management business.
