Mattioli Woods targeting pension changes

Following the release of Mattioli Woods results for the six months to November, in which the company reported a 23.4% revenue increase, founders Bob Woods and Ian Mattioli detailed what they see as the opportunity being presented to them by upcoming changes in pension rules.

Mattioli Woods targeting pension changes


“We are in a market space which is changing on the back of legislation,” explained Mattioli. “Individuals will be given a lot flexibility and opportunity around their pensions. Particularly for the man in the street, all of a sudden they will need to take advice to understand what happens going forward for them personally.

“The changes are a catalyst for people to look at their situation. I think there are sufficient products on the market but there is a real lack of advice. In order to get best value from their options clients need to get advice because everyone’s situation is different.”

“George Osborne’s legislative changes have taken the market by the scruff of the neck,” Woods added. “In abolishing what is essentially tax on death, he has paved the way for inheritance of pension funds for the next generation.”

The firm recorded proceeds of £16.59m – against £13.4m in the six months previous – alongside total client assets rising from £4.3bn to hit £5bn. Discretionary assets also jumped from £510m to £870m.

These factors constituted 20% overall organic growth for the firm, which Woods and Mattioli attributed to the increasing need for pensions advice.

Mattioli Woods’ £2.6m profit for the period was bolstered by the company’s acquisition of Bellpenny’s £83m SIPP book Torquil Clark for just £1 on 23 January.

One of the driving factors behind the purchase was Mattioli and Woods’ belief that they are well-positioned to help clients understand how different pension schemes apply to their individual situation.

Woods said: “While annuities give certainty in some respects, the other side of the coin is that if you die early you are going to get a very poor deal, which drawdown does not have.”

“For some people the annuity route is the correct one for them, for others it isn’t,” Mattioli added. “Annuities are a very useful financial tool, but so is the drawdown method. [As an adviser] we have to work out where they sit. There is a whole raft of differentiating factors: health, age, cost, wanting to pass money on to the next generation, understanding of risk.”

“What we are seeing is quite a strong move towards drawdown,” said Woods. “We have come from a market where annuities were the norm and drawdowns were only for syndicated investors who were aware of the very real risks. But the reality is that the position was overstated. The very compelling flexibility of drawdown means that when people look at the pros and cons they are choosing drawdown over an annuity purchase.”

Mattioli added: “For higher net-worth clients it is probably going to be the opposite as they stop drawing money from their pension funds, because they have only previously done it to avoid the purchase of an annuity.”

“Risk is the biggest element,” Woods continued. “Annuities are going to give the lowest risk by way of funding a long-term income stream, but there is a premium price to be paid for them.”

Mattioli said that he is “desperate” to see clients’ costs come down from the industry norm of 2-3% to between 1 and 1.5%, with Woods forecasting a far more competitive market as a result of dropping prices.

“The sector is changing and becoming more competitive,” said Woods. “I think the number of IFAs is going to continue to reduce – it has already fallen from around 25,000 to 20,000 in the last five years.

“We are going to see the development of larger, better-resourced organisations, but at the same time see new models come into the market in the shape of big institutional players.”



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