Royal London, Aviva and AJ Bell have topped the list of the most recommended pension providers in Defaqto’s newly released Pension Service Review.
While Royal London and Aviva saw a reduction in support from advisers compared to the previous year, AJ Bell experienced an increase, moving it ahead of Quilter and Prudential in ranked position. Over two years, AJ Bell has leapt from seventh to third spot.
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.
As well as the most recommended provider, Royal London also tops the list of preferred providers, holding the position for its third consecutive year. However, the gap to Aviva considerably narrowed this year, whilst Quilter ranked third.
In total, 18 providers received sufficient adviser nominations as preferred providers to be awarded a Defaqto service rating.
The top 10 preferred providers, in order, were:
- Royal London
- Quilter (Old Mutual Wealth)
- AJ Bell
- Fidelity Adviser Solutions
- Aegon Retirement Choices (ARC)
- Canada Life
- abrdn (for Wrap)
Canada Life, Wealthtime and 7IM also made the list of preferred providers and saw the most significant increases in support from advisers, whilst Dentons Pensions Management features in the list of preferred providers for the first time.
Best performing providers
Defaqto also identified the top performing providers in seven service areas, including ‘Provider strength and brand’ and ‘Product and proposition’.
abrdn (for Wrap), Fidelity Adviser Solutions and Royal London dominate the ‘top performing table’ with six appearances in the top three positions across all categories. Canada Life and Transact also fared well.
Overall, the industry is meeting or exceeding advisers’ expectations in six of the seven service area categories.
Richard Hulbert, Insight Consultant at Defaqto, said: “We’re pleased to see the number of providers given an impartial Defaqto Service Rating has increased in this year’s review, with some notable ups and downs in provider popularity.
“As is always the case, it’s interesting to observe those providers who have not been rated and/or who have experienced a decrease in popularity. With the FCA’s Conduct of Business Sourcebook (COBS) ‘fair value’ and ‘value for money’ assessments in mind, a Defaqto rating based on hundreds of advisers’ experiences appears more valuable in 2023 than ever before.”
The report also reveals the types of pensions financial advisers have recommended in the last 12 months.
Personal pensions, drawdown and SIPPs remain the most popular pensions products with advisers. However, unlike previous years where there had been a low level of interest in annuities, this year saw support for fixed-term annuities increase by 23%.
Richard Hulbert commented: “The changes we see from last year in terms of recommended pensions products suggests that drawdown is no longer the all dominating option it once was.
“The observed increase in the use of annuities is especially interesting because it precedes the ‘Truss mini-budget’ and the cost-of-living crisis starting to take hold. With today’s annuity rates setting fresh highs we expect to see their popularity increase further as it is generally considered to be good advice to use a secure income to cover known living expenses.
“The 58% increase in interest we identified in small self-administered schemes (SSAS) is somewhat of a surprise. This is because, arguably, none of the traditional big financial providers offer a SSAS. In addition, the number of SSAS providers who facilitate investment in commercial property has decreased. We have put this growth down to a rise in advice solutions that have truly put the client at the heart of the solution, which shows the Consumer Duty is having an impact on advice.”
Read the full Pension Service Review 2023 here.