Speaking as the Edinburgh-based insurer revealed record growth for its online savings platform, he said that the “relentless” pace of regulatory change facing the sector has seen providers failing to focus on the customer experience.
With radical overhauls such as the abolition of adviser commission and increased freedom over how savers access their pension pots, Grace said that investment in the industry “has focused to a large extent on remaining compliant and just keeping up with the changes”.
He added: “This has meant under-investment in user experience across the board and if we look outside our industry, we see the businesses that are successful are those that make life as easy as possible for their customers. Amazon is a prime example of a business that has been successful largely because it’s so intuitive and understands its customers. The next big challenge for our industry is to invest in the user experience while continuing to keep pace with regulation, which will no doubt continue to evolve.”
His comments came as Aegon, which last month completed its £140 million acquisition of Legal & General’s Cofunds division, said the value of assets on its platform swelled by £7 billion during 2016 to hit £13.4bn, with inflows of £1.9bn in the final three months of the year, which Grace said was the operation’s “best quarter yet”.
Growth of the platform, which helps savers manage their investments online, has been driven by new business wins, “buoyant” stock market conditions and a programme to upgrade existing customers to the digital world.
Dutch-owned Aegon, based at Edinburgh Park, employs about 2,100 people. The takeover of Cofunds, which has more than 750,000 customers and assets under administration of some £77.5bn, followed its acquisition of BlackRock’s £12bn defined contribution (DC) platform and administration business and the sale of its £3bn UK annuities portfolio to Legal & General in May.
Grace also hailed “excellent” results at the group’s protection business, which saw fourth-quarter sales jump 11 per cent compared with the same period last year.
“2016 was a game-changing year for Aegon and by selling our annuity book and acquiring both Cofunds and BlackRock’s DC platform, the business has a very clear focus,” he said yesterday.
“A combination of factors including the pension freedoms, investment uncertainty and an increased demand for advice on transfers from defined benefit schemes is creating strong demand for financial advice.
“Against this backdrop our goal is to help advisers and other intermediaries meet this demand by offering the best tools and service and by not competing for distribution, we believe we’ll be successful.”