Aegon suffered net outflows of £1.1bn in the first half of the year, but the company says it will continue to invest in its retail platform.
Mike Holliday-Williams, chief executive of Aegon UK, told Money Marketing the company is still in a positive net flow for its total platform business – workplace and retail – with £368m.
But this was down from a billion pounds last year and the drop was driven by the retail side.
The overall picture of the retail platform market has looked rather bleak in recent months with stats published today showing a record low for net sales.
Holliday-Williams said: “Our retail market is down; inflows have been down for a bit and outflows have increased. Our retail platform is down significantly, while our workplace business continues strong momentum after a record year last year.”
Aegon’s workplace solutions platform saw £1.5bn positive net flows for the first half of 2023. This was up from £1.1bn for H1 2022.
Meanwhile, net outflows amounted to £1.1bn for the retail platform. Compared with net outflows of £66m in the year prior period.
“This reflects reduced customer activity because of the current macro-economic environment, as well as an industry-wide reduction of transfers from defined benefit to defined contribution pensions,” the company’s results outlined.
Aegon UK’s CEO said the company was pleased with the half-year results for the workplace business as it shows good momentum because of the investment put into the platform.
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But Holliday-Williams pointed to the tough market conditions for the retail platform, which has affected inflows and outflows.
“The problem is across the platform adviser market. There are uncertain market conditions, a change in customer behaviour or reduced customer saving behaviour with more taking money out due to the cost of living, which is a challenge,” he said.
“We know it will come back. Our view is that we should keep investing in the platform and keep improving the service we are delivering.”
He outlined Aegon’s “strong operating result” of £97m, which is up 24%.
“So, we’re pretty steady, even though the market has been really challenging. We’re pleased about that. It’s important, because we need to invest back in the business which is what we’re trying to do as a core part of our strategy,” Holliday-Williams told Money Marketing.
The firm’s results outlined the increase was mainly driven by a higher net investment result, which benefitted from favourable equity markets and higher interest rates and was partly offset by the impact of the planned transfer of the protection business to Royal London.
It added: “The part of the platform business that is not accounted for as insurance business resulted in an operating loss that increased over the reporting period due to a reduction in fee income and outflows in the retail channel. The benefit of higher net deposits in the workplace channel was more than offset by higher expenses as we grow this business.”
Holliday-Williams said it is difficult to tell how long it could take for the adviser platform to recover but for Aegon it is important it “can navigate through” however long it is.
“We will keep improving our proposition,” he said.
“What is encouraging is people are continuing to save in their pensions, which is really important.”
He added: “We really want to focus on our platforms. Selling the protection business allows us to focus our people back on our platforms but also our investment back on our platforms. It’s a really good outcome for customers going to Royal London and it allows us to get that focus back on our core platform business.”
Source: Aegon first half year 2023 results
