The last decade has seen the rise of FinTechs, many of whom I imagine saw being acquired by an incumbent as an exit strategy.
More widely, the market is busy with acquisition activity, particularly through private equity, as we have seen with Bain Capital’s purchase of LV=.
Royal London would have become well aware of Wealth Wizards' capability when conducting due diligence on the potential purchase of LV=.
It may be good fortune that Bain Capital have concluded that Wealth Wizards is not core to its strategy, giving Royal London the opportunity to acquire an LV= asset that Royal London valued.
Royal London’s purchase of Wealth Wizards from LV= could be driven by a number of underlying dynamics in the market.
1. Digital
Like many of history’s negative events, there are positives that have emerged.
The pandemic has acted as a catalyst for adoption of, and comfort with, digital. The removal of access to long-held channels of comfort forced a behavioural shift that had previously resisted encouragement alone.
Online banking has increased significantly in adults over 65. As many as 84 per cent of adults made a contactless payment in 2020, while the use of mobile wallets has doubled since 2017. If nothing else, we have all become WhatsApp, Zoom, Hangouts, Teams, Google Meet experts as we played conference call bingo at home and at work.
It remains to be seen what shape the industry takes once we ‘return to normal’ but you feel it will be one where digital enablement takes centre stage.
Providers with the digital capability to be efficient and to engage a new digitally comfortable customer will be well placed.
The MyEva capability, from Wealth Wizards, will add value to Royal London’s workplace proposition and benefit that cohort of customers through engagement with their retirement.
The advice market will shift from face-to-face to hybrid, digital face-to-face advice as geographical boundaries are rendered less relevant to growth ambitions.
Royal London acquiring that capability through Wealth Wizards is a smart move. Not just what they have today but what they could develop in future using their underlying technology, innovative culture and talent.
2. The advice gap and economic advice orphans
The perfect storm of pensions freedoms and the Retail Distribution Review has led to customers, particularly in decumulation, falling below an economic level to service and becoming ‘economic advice orphans’. This is a particular issue for life offices with large legacy books of business.
How do you continue to support and deliver good outcomes to these customers?
A problem that is amplified for customers with old IB policies, Annuities, With Profits and Equity Release, none of which sit neatly on an open architecture investment platform.
Customers with a portfolio of these types of products need specialist advisers, who often do not hold the qualifications to give truly holistic advice, just when the customer needs it most.
