Weathering the storm in Life and Pensions

Table of Contents

• DATAMONITOR VIEW
  • CATALYST
  • SUMMARY
• WEATHERING THE STORM IN LIFE AND PENSIONS
  • Life companies and financial advisers fail to recognize that a downturn could be imminent
  • The life industry will feel the market downturn but will be shielded from the worst effects
    • Although the market will be cushioned, strategies still need to be examined
    • The reality is that life company asset managers will be less hard hit than other players in the asset management industry
    • Communication is vital if the impact of short-term fluctuations is to be avoided
      • Asset management strategies in the life industry will remain largely unchanged in a market downturn
      • Realistic reporting may save life companies from the uncertainty that hit them in the last bear market
    • Providers are not unwilling to communicate with their clients but must do so more readily
  • Product redesign may be necessary but providers must learn from previous mistakes
    • Capital-protected products and smoothed products will increase in importance but targeted marketing rather than new product development must be the focus
    • Increasing product transparency holds a mirror to the downturns as well as the upturns
    • Competing products outside the life market will continue to represent a challenge
    • Some consolidation of products to the lines that are most profitable and core to the business is necessary
  • Providers are over-reliant on advisers to keep their clients
    • Advisers do not have strategies in place to aid providers in market downturns
    • Advisers will wait to take the lead from providers
• APPENDIX
  • Definitions
    • Currency peg
    • Exchange-traded fund (ETF)
    • Guaranteed fund/Capital-protected fund
    • Risk tolerance
    • Uncorrelated investment
  • Methodology
  • Further reading
  • Ask the analyst
  • Datamonitor consulting
  • Disclaimer
  • List of Tables
    • Table 1: UK life and pensions company assets under management split by asset class, 2002-06 (%)
  • List of Figures
    • Figure 1: Responses to the question "How concerned are you about the potential for a recession in the next year?"
    • Figure 2: Just 7.1% of UK life company assets are held in property-related investments
    • Figure 3: Responses to the question "Which of the following provider qualities would be more or less important during a market downturn than now?"