Never the twain shall meet: With profits & platforms

23 April 2022

With profits and platforms may seem like unlikely bedfellows but changes have been happening in the market, says AKG’s Matt Ward. 

As a concept with profits tends to divide opinion but, whether you are a fan or not, it undoubtedly remains worthy of note as an ever present (and sizeable) factor in the UK financial services market.

The amount of with profits business in-force remains considerable. With profits technical provisions totalled nearly £250bn1 at the end of 2020 [2019: £255bn 2018: £257bn].

And perhaps with profits is continuing to evolve and modernise. Whilst for some time now, and for a variety of reasons including compatibility, with profits and platforms have seemed like unlikely bedfellows, 2021 saw some notable announcements and developments.

In July 2021, Novia announced the launch of the Wesleyan With Profits Fund on its platform. This claimed to be the first distribution tie-up of its kind, given that with profits offerings have not previously been made available via intermediary platforms.

A fascinating change in dynamics then for the with profits market and it will be interesting to see what traction this link up generates for Novia and Wesleyan during 2022 and beyond.

Whilst operating an ‘in-house’ financial planning team, Wesleyan has not typically targeted the wider intermediary market with its fund and so this represents a change in distribution approach for them. A new intermediary distribution team has been established to drive intermediary sector growth for the fund and with the Novia platform link in play one might anticipate further strategic distribution partnerships (platform or otherwise) to come.

Also, it is no secret that the addition of the PruFund range to M&G’s Wealth Platform (formerly branded Ascentric) is also being planned and it remains to be seen if this will be formally launched during 2022.

AKG anticipates that other active/open with profits fund providers might also seek to follow this evolutionary path, via development of such intermediary platform distribution relationships.

Indeed, LV=’s recent announcement that it has signed a deal with Embark, which will see advisers and their clients gain access to Embark’s retirement-focused platform, also suggests the development of such a relationship involving smoothed and with profits fund solutions.

As ever, the proof will be in the pudding in terms of whether these new strategic partnerships and distribution relationships drive further interest, growth and flows into with profits.

Further details of AKG’s annual UK Life Office With Profits Reports can be found on the AKG website.

1Source: AKG 2021 UK Life Office With Profits Reports – this figure includes a small element of double-counting due to reinsurance.

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