- Royal London and Aviva remain the providers most recommended by advisers, ahead of Prudential which has risen above AJ Bell and Quilter
- Across seven categories of service measured in the Service Review, industry satisfaction has declined by an average of 8% in the past year
- There has been renewed interest among advisers in decumulation options, such as annuities and hybrid solutions
Royal London, Aviva and Prudential have topped the list of the most recommended pension providers in Defaqto’s newly released Pension Service Review 2024
Retaining its position as the most recommended pension provider in 2023, Royal London has slightly increased its lead ahead of Aviva Life & Pensions compared with 2022. Both firms have the support of in excess of 35% of advisers. Prudential has improved its ranked position, moving into third place ahead of AJ Bell and Quilter.
The annual survey conducted by the financial information, ratings and fintech business, measures how satisfied financial advisers are with their preferred providers and identifies where expectations are being met.
Preferred Providers
As well as being the most recommended provider, Royal London also tops the list of preferred providers, holding the position for its fourth consecutive year. It is a top three choice for 30% of advisers, significantly higher than other brands. Aviva ranks second as a top three choice for 24% of advisers with other providers recommended by 18% or less. abrdn Elevate made the top 10 this year with 9% preference, equal to abrdn (for Wrap) and Aegon Retirement Choices (ARC).
In total, 20 providers received sufficient adviser nominations as preferred providers to be awarded a Defaqto Service Rating for 2024.
The top 10 preferred providers, in order, were:
- Royal London
- Aviva Life & Pensions
- Quilter
- Prudential
- AJ Bell
- Transact
- Fidelity Adviser Solutions
- Aegon Retirement Choices (ARC)
- abrdn (for Wrap)
- abrdn Elevate
Best performing providers
Defaqto also identified the top performing providers in seven service areas.
InvestAcc dominates the table of top performers taking first or joint-first position in five categories: ‘Provider staff’; ‘Product and proposition’; ‘New business servicing’; ‘Pension freedom servicing’; and ‘Existing business administration’. Royal London also fared well with four top three appearances across the seven categories, ranking joint-top for ‘Provider strength and brand’. Fundment placed first for ‘Online services’.
However, overall, the industry is failing to meet advisers’ expectations in five of the seven categories of service — although performance in four of the categories is just one or two percentage points short.
Richard Hulbert, Insight Consultant at Defaqto, said: “Service levels and adviser expectations are reflected in the decreased satisfaction scores in this year’s report. Industry satisfaction has dropped by an average of 8%, and as much as 11% in some categories.
“It’s concerning to see the lowest unweighted performance scores being received for ‘Existing business administration’, which is ranked as the third most important category for advisers. A sure sign that providers need to look at how they can improve this service area going forward.
“What is clear is that advisers are increasingly dissatisfied with pension providers across all measurements. Perhaps this is an indication that their propositions have not kept pace with the evolving regulatory environment. Whatever the reason, these numbers send a clear message that advisers expect better.”
Popular Products
The report also reveals the types of pensions financial advisers have recommended in the last 12 months. Personal pensions, SIPPs and drawdown plans remain the most popular pension product options. But, compared with 2023’s Review there has been a renewed interest in other decumulation options, such as annuities and hybrid solutions.
Richard Hulbert commented: “Economic and regulatory changes have resulted in significant shifts in the pension market over the last two years and the popularity of products being recommended by advisers. The number of products being recommended has jumped from 3.2 to 3.84 on average, or 3.6 if you discount workplace recommendations which have been newly added to the list this year.
“Decumulation has been a winner this year. Some 3% more advisers said they recommended drawdown and 25% more said they recommended annuities including conventional non-profit, enhanced, impaired products. The use of hybrid and blended solutions, a combination of annuity and drawdown, has also jumped by eight percentage points. This could be driven by economic factors linked to limited stock market growth, stagnant dividend yields and high inflation.
“In addition, advisers have been under increased pressure from Consumer Duty and the FCA thematic review of retirement income, to justify their advice and prove their value.”
The full Pension Service Review 2024 can be found at https://www.defaqto.com/resources/2024-pension-service-review
