Pension freedom servicing is top of adviser’s list, but satisfaction falls short

Although pension freedom servicing is top of the list for importance as rated by financial advisers, it falls short of adviser satisfaction experience.

This was the conclusion of a new review of the service provided by pension providers as rated by financial advisers and completed by financial information business Defaqto.

The other key findings were that provider strength and brand scores highly in terms of adviser satisfaction experience, but is not rated as highly in terms of importance. And that personal pension, drawdown and SIPP are the three most recommended types of pension products, so focus on drawdown should be a priority for providers in terms of communication and service and allocate appropriate resource to these areas.

The report provides financial advisers with insight to help them benchmark their own personal experiences of pension providers, with those of their peers, enabling them to select partners based on service criteria.

The service satisfaction survey, which asked advisers to rate pension providers in relation to the importance of seven categories, ranked ‘pension freedom servicing’ and ‘product and proposition’ the most important aspects of service.

Defaqto asked financial advisers about their views on the service they receive from over 200 providers covering DFMs, protection insurers, platforms, pension and bond providers.

For pensions, advisers were asked to rate providers in relation to 7 categories:

The new service satisfaction category of ‘pension freedom servicing’ is ranked most important, but receives the penultimate lowest ranking in terms of satisfaction experience.

Personal pension, drawdown and self-invested personal pension (SIPP) are the three most recommended types of pension products. As drawdown is so highly recommended, it is not surprising that ‘pension freedom servicing’ has been rated the most important satisfaction category. It’s therefore essential that an adviser is able to deliver a good service to clients.

However, as the table shows, this category falls short in adviser satisfaction from providers and should be an area of focus when providers review their propositions and their delivery of them. This is particularly endorsed with the result of ‘provider strength and brand’, which is considered to be of much lower importance, indicating that perhaps adviser loyalty to a brand is not as high as a provider would like to believe.

Head of Insight and Consulting for Wealth and Protection at Defaqto David Cartwright said: “Getting pension freedom servicing right has to be the key takeaway from the results of this year’s survey. With the pension freedoms coming up to 2 years old in April 2018, it is not surprising that this is now the number one most important aspect for advisers so providers need to get the communication right. Providers should consider all elements of service and allocate resource where appropriate to avoid dissatisfaction from their customer base which may adversely affect the adviser’s product selection.

“Defaqto’s Service Ratings form part of our range of ratings suite. We analyse over 41,000 financial products in the UK of which nearly 10,000 are funds or fund families. Each product or fund is assigned a Star or Diamond Rating on a scale of 1 to 5. Whilst these ratings are based on facts not opinions, our Service Ratings are. We ask financial advisers to rate the services they receive. This collective information helps the industry in continuously improving standards by creating awareness of what elements of service work well and what elements don’t with providers.”