Thanks to Peter Dorward for providing a Value For Money statement that can be positioned on this blog in a way that complies with the FCA and TPR’s ask.
It’s taken from the slimmed down version of the report which you can read here
the full version of the report is here.
From the full report , we get meaningful Management Information. I reported yesterday on the absence of MI from Fidelity’s report. This is the kind of information which is helpful to employers and advisers
Employers can see how much their staff are paying and ask Royal London and their adviser why. This is clear and good
Not so good is the messaging on performance. The IGC very properly wants to hold Royal London’s feet to the fire over expectations given to policyholders on performance
the khaki box at the end shows that these three governed portfolios haven’t. This is confirmed by comparison tables used by the IGC (properly published in the appendices)
The information in the comparison tables demonstrates that Royal London’s performance is below average for the longer-term portfolios while taking less risk than most. Royal London has less equity exposure than the competitors listed. Royal London’s view is that customers will benefit from this greater diversification over the longer term. As part of its ongoing strategic asset allocation, Royal London considers the amount
of risk taken at each stage of the default investment strategy
It seems from this that the IGCs statement that VFM has been achieved on net returns to members is based on the promise from Royal London based on expectations of future returns not on what has happened.
My worry is that so long as VFM is based on the promise for the future and not on the experience of the past, accountability for the past will be limited. Savers have nothing to judge a provider by other than their experience and I find the VFM approach adopted by the Royal London IGC is not based on experience but on speculation, There is much about it which is good but it falls down when it talks to what has actually happened on performance.
Sadly, if I cannot have confidence in the analysis of investment performance (which I can see) , I become dubious about the claims about service (which I can’t). Overall I can only give the report an orange for its VFM assessment.
Is the Royal London IGC effective?
The chairs of IGCs are very important and this IGC is very important. Peter Dorward is very important as chair of the IGC to ensuring Royal London’s policyholders get a good deal. And the IGC is important to Royal London as its workplace pension strategy is based entirely around its contract based GPP. Finally he is important to the employers who use the Royal London GPP and the members who find themselves depending on the GPP’s VFM.
Dorward, perhaps more than any other IGC chair I know, is a believer in the power of data and analysis, This report shows that the IGC has been busy collecting data on all manner of matters, not least how members feel about their plan.
This graph shows that the sentiment of policyholders is not always good. Policyholder (called customers) vary in their views depending on whether they are savers, mature savers or spending their workplace pensions. Unsurprisingly , those who are choosing to stay with Royal London have a better view of their provider in most instances (the exception being the involvement of the membership). Those who are savers by enrolment are not showing high levels of satisfaction. Three quarters of savers expressed low satisfaction with investment, member services and “payments” of claims also show 2/3 of savers dissatisfied.
This kind of analysis, properly displayed in an IGC report is how change happens. I am happy to amplify the message that savers are not satisfied by their experience but it’s proper for the IGC to do the same.
I suspect that there is a fundamental conflict which I’ve reported on before at Royal London. Because the GPPs are so important to the company , it is hard for this analysis to be fully publicised. I suspect that this blog will be the only publication picking up on this.
That does not however mean that the IGCs work is effective and I give the report a green for its excellent analysis and data reporting.
A good read?
The report is hardly a spell-binding read. Dorward’s style is dry but it is clear. There are a few proof-reading errors and there are some pretty cheesy clip-art – especially in the summary document but these are minor quibbles.
The analysis in this report is first rate and the appendices superb. It may not be an easy read but it is a good one. It gets a green.
This is a good report which takes its subject seriously and provides useful information throughout. I hope that Royal London will take it as seriously as its authors.
