Press releases

Legal & General Savings launches its RDR proposition.

Mark Gregory - Group Chief Financial Officer
Mark Gregory
Group Chief Financial Officer

23 November 2012

Mark Gregory - Group Chief Financial Officer
Mark Gregory
Group Chief Financial Officer

Legal & General has launched its response to the Retail Distribution Review (RDR) offering a professional financial advice proposition to the mass market through high street branches of banks and building societies* ensuring these customers get access to the kind of advice and investments they need – at a low price.

After years of planning and preparation, from today the company’s fully trained** financial consultants in branches can start advising on a new range of products and services, where the charge for advice is separate and transparent from any product costs.

Although the deadline for introduction of the RDR new rules is 31 December 2012, the company believes that introducing the new approach early will benefit customers who may be concerned about where they should go for affordable advice and products when the new rules come into effect.

What this means for customers:

  • 20 million customers continue to have access to affordable financial advice;
    We all need financial products at some point and, our research*** indicates, people will usually seek help from a financial adviser on “more complex” financial services such as investments, pensions, SIPPs and annuities. The vast majority of consumers will choose the advice channel that represents value for money. Historically, for the mass market these are the Banks and Building Societies.
  • No fee and no obligation;
    There is no fee and no obligation. Consumers decide whether they agree to the cost of advice before buying a product, and will only pay a fee if they decide to go ahead and invest. Clearly, if customers are shown how much advice will cost, and they are reassured that the services they will receive represents fair value for money, this presents a massive opportunity to encourage more people to save for the future.
  • Low product costs;
    Legal & General has a proven track record of providing simple products and our charges; in particular our passive fund charges, are already among the lowest in the industry. For example; for Select Portfolio Bond a customer will pay the low product charge of 0.5% per annum and within that product our largest fund, the UK Equity Index fund, has a TER of 0.25%.
  • Transparent and simple way to pay for advice;
    Customers will not have to pay for advice separately. Our research shows that 4 out of 5 consumers, regardless of income, prefer to pay for advice within the overall cost of the product they are buying (i.e. less than 20% say they will choose to pay an upfront fee for advice)****. This can be done via facilitated adviser charging (FAC), which we offer, where the cost of advice is deducted from the investment that the customer makes.
  • Direct advice service;
    Consumers will have a choice of ways to access financial advice. Our direct service, Legal & General Financial Solutions Direct, provides over the phone advice to Legal & General customers delivered by our expert, qualified financial consultants. This ensures that even where people prefer to buy direct they are still able to access financial advice and choose appropriate products or funds.

Mark Gregory, Legal & General Chief Executive Officer Savings said; “Three years ago, in November 2009, we said we believed the success of RDR would depend on delivery of the best outcome for consumers in terms of access to advice and affordable products and services.

Today we have reached an important milestone in that journey and have delivered a mass market proposition that provides access to the kind of advice people need at an affordable price.

This is an important step which we feel will ensure consumers do not miss out on the benefits that good advice can bring such as improved investment experience and needed protection for the financial well being of their dependents.

As one of the leading financial services groups in the UK with around 7 million customers, we recognise that building consumer trust and confidence in the services we provide is key to our success in the post-RDR world.

That is why we are delighted to announce today the launch of our new adviser service and a wide range of new products for our bank and building society partners.

We believe this is a major change, a change for the better in the way the financial services industry will distribute its products and services to customers and will encourage more consumers to save for the future.

I am confident that we will deliver a service that customers will value, which offers access to high quality, simple products and financial advice backed by a brand they can trust.”

Legal & General has a proven track record of providing simple products and our charges are already among the lowest in the industry. In addition we are well placed from a distribution perspective as 87% of building societies customers can already access our services via their high street branches.

Notes to editors

*We have sole tie distribution partnerships with Yorkshire, Leeds, Dudley, Tipton & Coseley, Cambridge and Leek United building societies, amongst others, plus Virgin Money (which was Northern Rock). In addition we provide financial products and services to Nationwide, which together represent 87% of the building society customer bases - a population of around 20 million account holders in all.

** All our advisers are qualified to the same standard - QCF Level IV minimum standard for both independent and restricted advisers. In banks and building societies our financial consultants offer a restricted advice service.

*** Source: PwC RDR research among 4,080 consumers conducted April 2010

****Source: PwC RDR research among 3,988 consumers conducted March 2012

RDR Product range.
Our product range includes ISAs, Unit Trusts, Select Portfolio Bond, International Portfolio Bond, Suffolk Life SIPPs, Annuities (Pensions and With Profits), and a range of Protection products to meet customers insurance needs.

Consumer Platform and Fund Expertise.
Our expertise in low cost passive management and in fund assembly and panel construction, backed by our scaleable fund platform delivery capability are well placed to support sales through restricted advisers and direct to consumer as customers seek lower costs for advice.

The scale of Legal & General’s Investor Portfolio Service (IPS) platform continues to build, with assets under administration of £8.1bn (as at 30 September 2012). It has been designed for restricted advisers (including bancassurance) and direct sales. It is already the 3rd largest platform in the UK based on customer numbers (source: PLATFORUM Adviser Guide Q1 2012).

The information contained in this press release is intended solely for journalists and should not be relied upon by private investors or any other persons to make financial decisions.

Mark Gregory - Chief Executive Officer Savings.
Mark was appointed to the Legal & General Board in January 2009. He joine