Defaqto has published its 2024 Pension Service Review, in which Royal London has been named advisers’ preferred and most recommended pension provider, but providers overall are failing to meet adviser expectations in many service categories.
Defaqto said Royal London has slightly increased its lead ahead of Aviva Life & Pensions compared with 2022. Both firms have the support of more than 35% of advisers.
Prudential has also improved its ranking, moving into third place ahead of AJ Bell and Quilter.
According to Defaqto’s review, Royal London topped the list of preferred advisers, holding the position for its fourth consecutive year. The findings show it is a top three choice for 30% of advisers, significantly higher than other brands. Aviva came second place, ranking as a top three choice for 24% of advisers, with other providers recommended by 18% or less.
The top 10 preferred providers, in order, were:
- Royal London
- Aviva Life & Pensions
- Quilter
- Prudential
- AJ Bell
- Transact
- Fidelity Adviser Solutions
- Aegon Retirement Choices (ARC)
- abrdn (for Wrap)
- abrdn Elevate
Defaqto also identified the top performing providers across seven service areas. InvestAcc dominates the table, taking first or joint-first position in five categories: ‘Provider staff’; ‘Product and proposition’; ‘New business servicing’; ‘Pension freedom servicing’; and ‘Existing business administration.’
Royal London also performed well, featuring in the top three across four of the seven categories,
Despite this, Defaqto said the industry as a whole is failing to meet advisers’ expectations in five of the seven categories of services, although performance in four of the categories is just one or two percentage points short.
Richard Hulbert, insight consultant at Defaqto, said: “Service levels and adviser expectations are reflected in the decreased satisfaction scores in this year’s report. Industry satisfaction has dropped by an average of 8%, and as much as 11% in some categories.”
Hulbert said it was “concerning” to see the lowest unweighted performance scores being received for ‘Existing business administration’, which is ranked as the third most important category for advisers.
“What is clear is that advisers are increasingly dissatisfied with pension providers across all measurements. Perhaps this is an indication that their propositions have not kept pace with the evolving regulatory environment. Whatever the reason, these numbers send a clear message that advisers expect better,” he said.
The ratings provider also looked at the types of pensions advisers have recommended in the last 12 months. Personal pensions, SIPPs and drawdown plans remain the most popular but there has also been a renewed interest in other decumulation options such as annuities and hybrid solutions compared to the previous year.
Hubert added: “Decumulation has been a winner this year. Some 3% more advisers said they recommended drawdown and 25% more said they recommended annuities including conventional non-profit, enhanced, impaired products. The use of hybrid and blended solutions, a combination of annuity and drawdown, has also jumped by eight percentage points. This could be driven by economic factors linked to limited stock market growth, stagnant dividend yields and high inflation.
“In addition, advisers have been under increased pressure from Consumer Duty and the FCA thematic review of retirement income, to justify their advice and prove their value.”
