Okay! Good morning, everyone. I guess it's been a busy morning for you so far. Thank you very much for joining us today. It's absolutely great to see you here. When we speak with investors, wealth is one of the areas that people have been asking to hear more about, and we're excited to give you more insight into this fantastic business, our growth ambitions, and why it's critically important for the group. So I'm joined here today by Doug Brown, who is the CEO of our Insurance, Wealth, and Retirement business, and Michele Golunska, our MD of Wealth and Advice, and they're gonna take you through the performance of and the plans for our wealth business and show you why we are so excited about our future. And of course, there'll be plenty of time for Q&A at the end.
But before that, I wanted to give you a quick overview of just how important wealth is to the group and the possibilities that it offers us. So without further ado, let's crack on. So simply put, wealth is one of the biggest growth opportunities in the The market is set to nearly triple to GBP 4.3 trillion in the next 10 years, delivering double-digit growth year on year. This is a phenomenal tailwind for us, and being a fee-based, asset-backed business with high returns, the financial and capital light characteristics of wealth are highly attractive, and Aviva is extremely well-positioned to capitalize on it, perhaps better placed than anyone else.
As you'll see, our workplace and advisor platform businesses are already exceptionally strong, and we're actively investing to round out our proposition with advice and direct wealth to take full advantage of the enormous opportunity in our customer base and the open market. With over GBP 147 billion in assets, we are already a leading player and we continue to demonstrate resilient asset and profit growth despite a challenging economic backdrop. Growing our wealth business is also central to the broader Aviva strategy. It's a key driver as we focus on growing the capital light businesses. It's a core customer acquisition engine for the group, with over 5 million customers, growing by nearly 1 million customers over the last three years. It gives us a great opportunity to deepen our customer relationships, grow and grow our leading retirement business.
Of course, while Aviva Investors is not the focus of today's presentation, it gives our wealth business a real competitive edge with its focus on ESG and sustainable investing. That's quite the prize to go for, and that's why we're focusing on growth in wealth. We've set ourselves big ambitions, and I'm confident that we can deliver them. I'm now going to hand over to Doug, who will set out why we are so convinced about the prospects of our wealth business. Off to you, Doug.
Brilliant. Thanks, Amanda, and, good morning, everyone. It's great to be here today to talk about our wealth business. Let me start with the key highlights. As Amanda said, Aviva already has a strong and growing wealth franchise, and we are a top player by assets and net flows. We're very well-positioned with market-leading workplace and advisor platform businesses, and we're investing in growth opportunities across advice and direct wealth. All that combines to underpin our big ambition to grow to over GBP 250 billion in assets and generate at least GBP 280 million in profit in five years. To see how we're going to do just that, I'll start by breaking down our wealth franchise in more detail. Our workplace business is a genuine standout market leader.
We hit the fantastic milestone of GBP 100 billion in assets this year, and we're nearly 1.5 times larger than our nearest competitor, and we're growing rapidly and profitably. With 4.4 million customers, we're a key source of customer opportunities for our other wealth segments and the wider group. Our adviser platform is at scale with GBP 39 billion in assets and is consistently outgrowing the market. We are in the top two for net flows, and our compelling proposition means that we can accelerate the strong momentum we have created. With the acquisition of Succession Wealth last year, we are rapidly scaling our advice capabilities, and we are already seeing some great signs of progress here, including recapturing customer outflows and driving positive flows onto our adviser platform.
We are launching a direct wealth and hybrid offering to round out our proposition for customers. We're in a great position as a leading player in a growing market, and crucially, this market growth is underpinned by fundamental societal trends. As you know, the shift from DB to DC and the introduction of auto-enrollment have accelerated workplace DC pensions. More than that, there is still a substantial and growing pension savings gap. With an aging population and material intergenerational wealth transfers over the coming decades, both direct and advised solutions will be critical to ensure customers can manage their wealth effectively.
These structural trends are driving growth across the whole spectrum of wealth, and the segment we are focused on is forecast to grow by double digits over the next 10 years, nearly tripling in value from GBP 1.6 trillion to GBP 4.3 trillion. This gives us significant opportunities across the board. With regular contributions through auto-enrolment, the workplace market is expected to continue on its highly resilient growth trajectory. The advice segment is also forecast to see double-digit growth, especially with the material and growing advice gap of over 13 million people in the ... In the direct-to-consumer space, advances in technology, guidance tools, and investment solutions will continue to drive demand. Overall, as I've said, we're very well positioned, and there is a real opportunity for us here to deliver double-digit growth. Importantly, we're not starting from scratch.
Aviva is already a leader by assets and net flows when we look across the retail and workplace Wealth segments, and Aviva's unrivaled customer franchise gives us a true competitive advantage. These customers, 6 million of whom are mass affluent, already know Aviva, they trust our brand, and they represent a significant growth opportunity for us. So we are laser-focused on recapturing more of the GBP 6 billion in annual outflows, and we are making good progress here. And with more than GBP 800 billion in investable wealth across Aviva's customer base, there's a lot more to go after as we aim to become the go-to lifetime financial partner for our customers, helping them to grow their assets. We are investing to capitalize on the growth opportunity in wealth by creating a customer-centric proposition that only Aviva can deliver.
We have strong foundations already in place with our leading workplace and adviser platform businesses. And by adding advice and direct wealth capabilities, we can now serve the full range of customer wealth needs, from a workplace pension in their first job right through to retirement, and all with seamless customer experience. We have the advantage of an in-house asset manager that is in the top three globally for responsible investment, and our strategic choice of FNZ technology across our wealth businesses gives us real operating leverage. In this presentation, we'll give further insight into the strength of each of our businesses and also how they come together for our customers. It's this customer-first approach that makes Aviva really stand out, and that, more than anything, will see us deliver on our big ambitions.
So as I've said, and as you can see on the left, we are already delivering consistently strong performance, with double-digit growth in assets and profits year-over-year, despite recent market headwinds. We are thinking big for the future. Over the next five years, we aim to scale up our wealth businesses to over GBP 250 billion in assets, growing at more than 10% per annum. Workplace and advisor platform will, of course, play a key role in continuing with their growth momentum, and our investments in advice and direct wealth will materially increase their growth and margin contribution over time. And as we scale, with operating leverage and higher margins, we will drive a material increase in our profit contribution to at least GBP 280 million per annum. This is over 15% growth per annum.
Now, these are big ambitions, supporting group capital-light growth, but we're very confident we can meet them. Realizing this ambition will ultimately come down to how we live up to our promise to our customers, and we have always prioritized delivering the right outcomes for our customers. For example, we pass on all the benefit of interest paid on cash balances. We don't take a proportion of the gain on our other platform assets, and we don't believe cash should be any different. We also don't have any early exit charges. This means our charges are as transparent as possible. With regular reviews of our fee structures, investment solutions, we are confident that we offer excellent value for money across all our wealth businesses.
We're there for our customers in other ways, too, from communications and vulnerable customer support, to helping our intermediaries ensure their products provide value for money. It goes without saying that we are compliant with the Consumer Duty July deadline set by the FCA. To deliver for our customers and on our financial ambitions, we have four priorities to share with you today, aligned to our component businesses. Michele will cover how we will continue to grow our workplace and advisor platform businesses and the strong progress we are making in advice with Succession Wealth. I will close with our ambitions for direct wealth, how we are bringing it all together for our customers, and the difference our approach makes to real lives. So, Michele, over to you.
Delicately.
It is.
Yeah, she is.
All done.
Thanks, Doug, and, and hello, everyone. Let's start with our standout number one workplace business, where Emma Douglas and her team have been doing amazing things. The numbers pretty much speak for themselves. More than GBP 90 million profit last year, with almost GBP 6 billion in net flows, despite a challenging macroeconomic backdrop. And this year, we've reached GBP 100 billion in assets, winning over 300 schemes already. This business has clear strengths. We have highly scalable operations and technology, and future growth is all but locked in with the highly resilient net flows we are securing. With 4.4 million customers, we've also, we're also critically important for the group, as you can see on this next slide.
The business is a key customer acquisition engine, with members of all ages and earning levels, and the customer base continues to grow at 7% year after year. With the average career now lasting over 40 years, we're uniquely set up to retain those relationships for the long term, serving needs throughout the full customer life cycle, from the first penny earned to the first home bought, through to retirement and beyond. In fact, over 30% of our workplace members have two or more Aviva policies already, and we believe that's just the start. Workplace is highly intermediated, so we work very closely with corporate EBCs and IFAs to support 21,000 corporates from some of the largest global brands to some small schemes with fewer than 100 members.
We're the only provider offering the full spectrum of corporate products across wealth, insurance, and retirement, and with the excellent relationships we have, more and more corporate customers can opt for more and more Aviva product and services. With our award-winning My Future Focus default fund, provided by Aviva Investors, we're capturing 56% of flows. The opportunity in workplace is enormous, and the market is uniquely attractive. In the decade since auto-enrollment was introduced, the market has more than tripled in size. With extremely resilient market growth through the constant flow of employer and employee contributions, it's expected to triple again, reaching GBP 1.3 trillion over the next 10 years. Last year is testament to this resilience, with workplace assets holding flat despite global markets falling more than 10%.
Regular contributions in workplace are as near to a guaranteed cash flow as you can get, effectively locking in future growth. 95% of new contributions are from existing employees, reducing reliance on increasing, increases to the workforce. Scheme retention across the market is also high, with many remaining with the same provider for over 10 years, especially beneficial for a business like Aviva, with such a highly successful track record in this area. And finally, there is significant opportunity for further upside. With today's pension savings gap of GBP 6 trillion, estimated to reach GBP 25 trillion by 2050, we are on hand to address the growing issue of income adequacy in retirement. The government is already looking into this, with consensus across many experts for a higher auto-enrollment rate of 12% to help solve the pension savings gap.
As Doug and Amanda have said, we are ideally positioned to take full advantage of these opportunities. As you can see, we have almost 1.5 times the assets of our nearest competitor, and this scale is a true competitive advantage. But it's not only scale. We also have strong penetration across all market segments, with shares of 20% and above in medium, large, and mega-sized schemes. We have a fantastic waterfront of clients, serving needs from the smallest employers right through to the largest brands, which embeds a diversification benefit into our business. When looking at contract type, we are the clear number one in contract-based schemes, the largest segment in today's market.
And we've been enhancing our master trust proposition as part of the group's GBP 300 million investment for customer and growth, which is delivering strongly and seeing us outgrow the market by 2 percentage points in recent years. So we have strong market position, and we are understandably very confident for the future. A key reason we have that level of confidence is because we have such a great offering for employees. Our workplace app, which launched back in 2014, is highly rated with a 4.3-star rating and has 2 million registered members. Customers are increasingly conscious about where they invest their money, and we have leading ESG investment solutions through Aviva Investors. We've been innovating for our customers, launching a leading pension tracing solution and developing a non-advised guided retirement pathway. Doug will talk more about these innovations later.
And we are, of course, a natural starting point for those requiring financial advice. We're also number 1 for employers and intermediaries. We hear time and time again from EBCs and corporate IFAs that Aviva's trusted brand makes us a clear provider of choice. We have automation across the board, from a seamless onboarding experience to giving customers the ability to manage their plans in a way that suits them. We offer truly leading customer experience. Our net promoter score of +81 on our My Money platform is stronger than most leading global brands. And we're a standout choice for employers who are increasingly partnering with sustainable climate-conscious partners. We're covering all the bases, hitting every mark, and delivering what our customers want. And this is driving our 70% new business win rate and 99% retention rate.
So I've talked about how we're showing up outside the business. Under the bonnet, it's a scalable operating model. Our technology architecture combines in-house development of our app and third-party solutions. Our Salesforce partnership gives us leading relationship management technology... and with FNZ as a strategic partner, we have a scalable investment platform. We've been automating to drive even greater operating leverage, achieving a near 100% straight-through processing for seamless small scheme onboarding, and enabling our customers to process transfers in from other pension pots entirely in-app. Finally, we have the added benefit of Aviva Investors managing our assets. So how does all this translate into the financials? As I've said, one of the great strengths of our workplace business is that it can deliver strong net flows year on year, well-insulated from external market conditions.
As you can see on the left, even the substantial negative market impact last year was largely offset by regular scheme contributions and wage inflation. We've already seen a significant uptick this year, exceeding the fantastic GBP 100 billion asset milestone. All of this plays out in our growth momentum, which becomes clear through our P&L. Revenues have been growing despite some margin compression in a highly competitive market. In expenses, strong cost control and our scalable operating model have been driving operating leverage, and as a result, profit has been growing very strongly at 20%. So that's our workplace business. We have. We are incredibly well-positioned, fast-growing, and profitable, and I hope you'll agree, we have every reason to feel very confident about what the future holds for us.
As we move to our adviser platform business, led by Roger Marsden, it's a very similar story of strong performance. Here, we've been consistently outperforming the market, taking market share in each of the last four years, quarter after quarter, with a regular level of growth that has been entirely organic. Our assets have been growing double digits despite a very challenging market backdrop. We're consistently a top two player by net fund flows. We're supporting adviser and customer needs with a leading proposition and unique ESG capabilities. We have a highly scalable platform underpinned by a hybrid technology model, and we're on track to become a material profit contributor to Aviva's wealth franchise. Looking at the market landscape, we are playing in the attractive platform market segment, where assets are expected to almost triple over the next decade to GBP 1.5 trillion.
We are well-placed to capitalize on several structural trends. Legacy assets, accounting for GBP 440 billion outside the advised platform market perimeter, are transitioning onto platforms, growing the size of our opportunity. We're supporting a shifting IFA landscape as firms consolidate into super firms through our leading platform capabilities and the development of our new asset transition capability. And with vertical integration or single tie arrangements on the rise, we continue our success in the open market and capture more of the value chain in advice through our acquisition of Succession Wealth. In recent years, we have outperformed the market across all key metrics: net flows, gross flows, and assets. In no small part, the outperformance comes from the proposition that sets us apart from the pack. Advisors rank us as the number one player in value for money. That doesn't mean we're the cheapest; we're not.
It means we offer excellent value proposition with high-quality service and exceptional functionality. We're making it easier for advice firms to partner with us, embedding automation across our platform, from streamlined onboarding processes to bespoke tools for planning, investing, and drawdown, and providing high-quality, dedicated support through strong distribution and service teams. We offer a full suite of investment solutions, recently winning awards for Best Stocks and Shares ISA Provider and Leading Platform for Model Portfolio Services. We're always striving for more, delivering 120 improvements to the functionality and service on our platform since 2019. Our A-class classification from the independent rating agency, AKG, is a clear indicator of our strength. We're delivering this in a way that is sustainable for Aviva, our customers, and yes, the environment, with unmatched ESG capabilities.
Advisors can objectively assess client portfolios against ESG criteria and themes with our profiling tool. Our sandbox is a test area for them to create ESG portfolios from scratch or tweak their model portfolios. We also have a plethora of resources available with the latest expert insights and thought leadership. These unique capabilities are widely recognized, having won a European award for sustainable investing impact reporting. All of this, combined under one proposition, makes us the platform of choice for new business and number one by advisor relationships. As with workplace, this performance is underpinned by highly scalable operations and technology, thinking not only of today, but also of our future ambitions. We have a hybrid technology model, optimizing for efficiency and productivity. Our user interfaces are developed in-house, giving us more control to cater directly to our advisor and customer needs...
Aligned to Workplace, we have strategic partnerships with leading third-party providers in FNZ and Salesforce. And our relationship with Wipro is driving material back-office process improvements and automation. And we have been selective with our integrations, choosing providers carefully to facilitate seamless interactions across our platform. Most importantly, we are operating under our target state architecture, with implementation and migrations complete. We are already processing more than 75 million transactions each year, with over 99% fully automated, and have everything in place for strong future growth. So how does this all manifest itself into the financials for our adviser platform? Well, we're showing strong momentum, delivering double-digit revenue growth and strong net flows, greater than 10% as a proportion of assets year after year, even with the recent market challenges.
Operating with leverage, opening the cost income jaws as we further scale the business, and sustaining double-digit profit growth while continuing to invest in the business. It's worth reiterating, we're not reliant on cash balances as a source of income. Just like with Workplace, I'm really excited for the future of this business and have great confidence that we will continue to outgrow the market. Turning now to Advice, where we are scaling up with Succession Wealth with James Stevenson and the team. The rationale here is clear: There is a growing customer need with a rapidly expanding advice gap of over 13 million people, an opportunity to stem outflows to competitors, and a real benefit for us to capture more of the value chain.
Aviva's research report on retirement in the 2050s showed that 73% of people retiring at this point would be interested in support to ensure they don't run out of money in retirement. To address this, we have a leading advice capability in Succession Wealth, an advice firm consolidator with 230 planners, over GBP 9 billion in assets under advice, and 19 offices across the Our planners support over 20,000 customers in a way that suits them best, whether in their home, a local office, or virtually. And given the breadth of financial support provided, this is a strong and often lifelong trusted relationship. And our MoneyAge Award just last week for Medium to Large Wealth Management Firm of the Year is testament to the quality of our people and our offering.
We're now a little over 12 months on since acquisition, and while it's still early days, we're making great progress. In the year since our acquisition, Succession Wealth have completed a further two acquisitions for more than GBP 1 billion of assets under advice, and has begun its largest recruitment drive in over a decade, adding more than 70 new planners through a mixture of hiring, acquisition, and the transfer of Aviva financial advisors. We now have 100 planners actively writing restricted advice, and we have also successfully piloted our customer engagement engine, generating 9,000 internal leads. These leads are particularly exciting, and we're now working to industrialize the way we connect our customers to the right advice solution.
We've developed a customer engagement engine, leveraging artificial intelligence, behavioral analytics, and our rich data to identify high-propensity customers, respond to customer actions, and at the right time, trigger highly personalized engagement. Customers are then directed to the right team or educational content, receiving the support they need for the future in the way that they want it. Alongside our existing engagement methods, such as referrals from contact center teams, this is already working. We're already achieving a 5% lead conversion rate, and we're striving for more. As a quick example, a customer recently consolidated four deferred pension pots with their Aviva pension, and then invested the proceeds of GBP 400,000 into Aviva Investors funds with a drawdown portfolio. These early successes only strengthen our confidence, and we're on track to deliver our target return on investment from Succession Wealth acquisition in the medium term.
Now, moving on to the financials. As you can see, we have been resilient in a turbulent market, with earnings largely flat in 2022 year on year, while continuing to provide excellent advice. I'm really proud of how we've always been there to reassure our customers, demonstrated by our 4.8-star VouchedFor rating. We're building on these stout strong foundations. We have a new, recently relaunched dual advice operating offering, with our planners offering both independent whole of market advice and restricted advice. For those unfamiliar with these terms, whole of market planners can use any platform on the panel, and restricted advice planners are tied to our market-leading platform. The latter typically cater to more simple advice needs, with the average customer assets of GBP 200,000.
Of course, we have the added benefit of our adviser platform, the platform of choice for the whole of market and restricted advice, and our investment solutions through Aviva Investors, both of which enable us to capture up to an additional 50 basis points of the value chain. We're excited to continue this momentum in Succession Wealth, aiming to grow to 500 planners over the medium term through M&A and organic growth. I'll now hand back to Doug to take you through the opportunity in direct wealth and how we're bringing it all together for our customers and ultimately, our investors.
Brilliant. Great! Thanks, Michele. None of us tripped as well. So that's good. Right, so you've heard about the real competitive advantages in our existing businesses, and I'm going to finish on how we're investing to bring it together for our customers as a truly connected wealth proposition. With this proposition, Aviva will cater to lifetime wealth needs of our customers, from pension auto enrollment in workplace and early stage investing, right through to retirement planning and managing income in retirement. And we're doing a lot here. We're launching a differentiated direct wealth offering, which will sit alongside our workplace and advice, and will round out our wealth proposition. We're pushing the boundaries on innovation across all stages of the customer life cycle.
And crucially, we're scaling up our customer engagement engine, which Michele has talked about, to engage our customers at the right time on their full set of wealth needs. And we're building the customer experience to enable customers to move seamlessly between our propositions. So where will this investment get us? Well, it's quite simple. Our ambition is to grow our customer base, increase their share of their assets, and retain them for longer. Let me elaborate, starting with direct wealth. As I've said, direct wealth will be a critical part of our proposition and a huge opportunity for us at Aviva. We already have an investment platform, but we are revamping our proposition around critical customer needs and a clear market gap in hybrid advice.
Just to give you some flavor of what's to come, central to this proposition is customer experience and the 360-degree view of customer wealth in a single screen, from cash, investments, and pension to equity and home, vehicles, and even jewelry, so customers can see all of their wealth in one place. We will also complement our advice capabilities in Succession Wealth by launching hybrid advice, giving our customers the full range of help and support they may require. We have a complete range of investments and product wrappers. From leading ESG solutions through Aviva Investors to risk-rated funds and D-DIY trading. With Joanne Phillips, Sarah Layden, and the direct wealth team, we are excited to be launching this new proposition early next year. Moving on to innovation. Let me give you a few examples of where we're really leading the way here.
For early stage investing, we have our award-winning Wealthify DIY investment platform. This robo-advice proposition provides tailored, risk-rated investment plans built and monitored by investment experts. It's highly targeted and is complementary to our other wealth businesses. In pension consolidation, we've developed a market-leading solution in partnership with Fabrick, helping us to secure more of our customers' assets, and we've been making real gains here, with transfers in up over 100% year-on-year. By leveraging artificial intelligence, we have reduced time spent on pension tracing by 87%, on letters of response by more than 75%, and we have fully automated the letter of authority process. Last month, we launched our pension dashboard to existing customers, well ahead of the government 2025 deadline.
Finally, we're developing an enhanced non-advised retirement solution with guided pathways that will help our customers better balance the flexibility they want with the security they need in retirement, all underpinned by structured investment solutions from Aviva Investors. This will allow us to retain our customers' assets for longer. Finally, on to customer experience. To see how it's all coming together for our customers, we have a short video to play for you. Take a look at this.
Introducing Moments That Matter. Let's take a look at Maya. She lives in Oxford, is 45, works as a software engineer, and holds over GBP 250,000 in pensions with her current and previous employers. Maya actively manages her finances and insures her GBP 700,000 home with us. Our single customer view provides extensive information about her current services and future needs, and the moments that matter. Regularly using her My Workplace app, it prompts her to consolidate her pensions using our pension discovery service, gaining a comprehensive pension overview. Later, our customer engagement engine uses thousands of data points and identifies Maya's interests in ISAs, introducing her to our direct wealth services. Aviva prompts Maya to open a stocks and shares ISA, and creates a holistic view of her wealth by linking pensions, ISAs, and other assets like her home.
Over time, she uses My Aviva's guidance tools and has access to digital coaching and our hybrid advice service for extra support. When approaching retirement, we prompt Maya to connect with our financial advisors. Maya schedules a home appointment, resulting in a personalized, sustainable retirement plan, where the advisor uses Aviva's advisor platform and ESG tooling. With real-time data, engaging digital experiences, and an unmatched array of services. Aviva helps in the moments that matter for customers like Maya. It takes Aviva.
Great, great video. Far more exciting than me explaining to you. So, everything you've just seen now, we're already doing. And, of course, hybrid advice is coming soon. Maya's journey is just one example, of course. Other customers will choose different pathways depending on their circumstances. The beauty of our model is that we can meet those needs, however, they shift across their lifetime. This could be a game changer for customers, and it will be transformative for us. So hopefully, you now share our enthusiasm for what we can achieve in this space as Aviva. We have the diversity of offerings required to meet the needs of millions of people at different stages of very different lives. There's a lot to take in today. I appreciate that, but let me leave you with a few key takeaways.
Wealth is central to Aviva's strategy and one of our biggest growth opportunities in the UK. We are already a leader by assets and flows with advantaged workplace and advisor platform businesses. We have invested in technology and innovation, and we are investing in advice and direct wealth to build a truly unique, connected wealth proposition, a breadth of offering never seen before in the UK. Our ambition is to grow the business to over GBP 250 billion in assets and at least GBP 280 million in profit within five years, and we're confident we will deliver. So thank you for your attention. I hope we've piqued your interest, and you can hopefully you'll see why Amanda, Michelle, myself, and the rest of the team are so excited about the opportunity.
I'm sure there's gonna be plenty of questions, so, let's move to Q&A.
Okay. Thanks, Doug. Thanks, Michele. Well done. Okay, so, we've got microphones to hand around, as you would expect. If you can just say your name and your institution when you get the microphone, please. That's obviously more for the benefit of the video. So hands up, and you can ask questions. Thank you.
Hi, thank you. It's William Hawkins from KBW. Thanks for really interesting industry insights. I'm sorry, can I be an analyst and just ask a bit about some of the numbers?
Of course.
The GBP 280 million target, from my point of view, again, you've told us very clearly about the growth of assets under administration, but how do we think about the growth of fees and the change in the cost income to get there? I'm assuming that most of the upside to earnings you're talking about is coming from leverage in the cost income, so fees grow in line with funds and costs grow less than that. But I'm wondering how you think about it. And related to the costs, we've had reasonably visible restructuring expenses in the first half of this year. How do they feature, you know, over this business plan?
Yeah.
How do they affect the glide path between today and 280?
Yeah.
Okay. Doug?
Okay. Yeah, I'm happy to take that. So, you know, hopefully, you'll see by the presentation, I mean, we have demonstrated, particularly in our workplace and advice business, improving margins. So we're very focused on, you know, the expense and the income ratio. And no doubt there will be fee compression. We've seen that in the market. We've seen that a little bit over the years, and we factored that in into our progression into our projections. But, you know, all of that is taken in. We also have the added advantage as you move out through the years, that you'll get direct wealth and the advice growing, which obviously have a different margin component than what you see in workplace and advice.
So, you know, we're very confident in the projections that we've shown. We think we've been, you know, not overly ambitious in terms of market growth assumptions and other things, so there's even potential to outperform, you know, some of that. But obviously, as a wealth business, you know, we're highly conscious that scale is very important, efficiency is very important. That's why we think, as Aviva, we'll be able to compete and, you know, beat the competition moving forward. We've obviously invested. You'll have seen, we invested, and some of that was above and beyond what our normal run rate would be.
We talked a little bit about some of those things today, the lead generation capability that we were building, some of the Succession Wealth integration. Some of that investment will continue slightly into the second half of this year into 2024, and then will level out over the period. But we have factored into our projections that, as a wealth business, we continue to have to invest, we continue to have to meet the needs of our customer advisors, and that's factored in. But the important thing is the fundamentals are there. There's no big migrations. The...
It's FNZ technology that we're very pleased with in terms of underpinning, and a lot of the investment is going into the customer experience, and therefore, it's not as heavily invested as you think it might be.
Thanks, Doug. Okay, next question. Don?
Thank you, Dom O'Mahony, BNP Paribas Exane. Thanks for the presentation. It's really interesting to get these insights, and to understand your outlook. I wonder if I could ask three questions, if that's okay. So, again, just picking up on the operating leverage point, which, Michele, you pointed to, could you just give us a little bit of a flavor of how the cost base works? So what... You know, is this one of those businesses where actually 90% of the cost is just running the fixed cost, and that's what creates the operating leverage, versus, say, marketing spend or servicing customers? The second question is just about Aviva, the conversion through to Aviva Investors.
How is that rate of conversion looking across these different segments? Do you have... This is clearly focused on the wealth bit of the value chain, but clearly, there's value to be gained there as well.
Yeah.
So I'm wondering what your thoughts are on the rate of conversion and whether there's upside. And then just a third question on the consolidation of wealth advice, which we can observe and, of course, you're participating in it. Why is that happening? Why is it that? Why is it that, you know, go back 10 years, you had, you know, a wide, a plethora of small firms providing advice, and now it's becoming more consolidated, and why do you think that's gonna continue?
Thanks. So great questions. Doug will pick up the first one, and Michele will pick up two and three.
Yeah.
Okay?
Yeah. I mean, hopefully, you saw in the presentation, if I use adviser platform as an example, and Roger, I think we said we have, what? 75 million transactions, and roughly 99% of them are automated. So when you think about leverage, and as we continue to add more assets onto the platform, it's marginal. We don't have to add more people. We don't have to add more things, and therefore... And you'll have seen that over the last few years as we've been able to get more scale onto the platform, we've been able to bring down that operating ratio, and that applies to the workplace business, and so forth.
That, you know, we're very, very much focused on that, and that's what gives us a lot of confidence right now-
Mm-hmm.
Because we've invested in the technology, we have the foundations in place. And yet there's still a few more things that we'd like to do to automate, no doubt, and we're very focused on making sure that we continue to invest to make it easier for advisors. But we're not looking at having to add people and millions of people. You know, it's the technology's there and therefore the scale, and that gives us confidence moving forward in terms of the jaws opening up as we add assets and the margins improving.
If I take the third question first, so why are we seeing this consolidation in the wealth market, wealth advice market? Well, I think there's several reasons that are driving this, actually. The first one is, you know, the demographic of advisors in the and the age and of that population, with many people having run successful businesses for many years, but now looking to sell those businesses and to retire. So I think there is a kind of desire to do that. I think the high multiples you're then seeing, as an attractive reason to drive sales. The businesses themselves, over the last five years, have had increasing regulatory pressure. So actually, the cost of running those businesses efficiently has been challenged.
If you look at the levies and fees that they are paying, as well as the, you know, the move towards a vertically integrated model, if you're not in that, it actually becomes quite a challenge to operate. So we do see this as something that is a kind of continuing trend. However, what I would say, though, is there is still a large part of the market that various sort of sub five person advisors that are still there and wish to participate in this market. And we might see consolidation into company, as well as sort of the creation of super firms or vertical integration. So I think it is... That's the dynamic that's driving it.
In terms of Aviva Investors, I think, you know, I'm so glad you asked this question because, of course, what you can see from the presentation I was giving is that actually, from a workplace perspective, Aviva Investors is a natural choice in terms of default choice for our workplace members. It offers fantastic price and choice of passive and active investment funds, also in terms of ESG criteria and credentials. So from an Aviva Investors perspective, we would see that they are working with us very closely to develop solutions that the employers and workplace members are looking for. So we see that as something that will continue to grow. And the interesting piece with the workplace market is that you're...
So as an auto-enrolled, you're enrolled into, you have to opt out. So there is, of course, that piece. But we are seeing success in terms of Succession Wealth. So Aviva Investors funds now feature it clearly in the restricted proposition, but they actually are on competitor platforms as well as options. And we're seeing an increasing amount of business placed into those funds. We see that as something that we will see increase as we see the industrialization of the customer engagement engine and the lead flow into Succession. So we see that again as a growing part of Aviva Investors' opportunity.
Of course, there is a revenue opportunity for us in terms of that additional revenue, providing those funds, that fund management.
Thanks, Michele. Okay, next question. Yeah. And then, Lewis, I'll come to you.
Hi. Morning, this is Abid Hussain from Panmure Gordon. I have two questions. First, on fees. Just wondering, how much fee compression have you factored in across the various segments? Any color on that would be helpful, please. And the second question is on advisers. How many net new advisers do you need to reach your targets, and does AI and ChatGPT, and large language models feature within that framework?
... Thank you.
Thank you. So, Doug, do you want to take the first one, Michele, the second?
I'll take all the sexy questions. Yeah. So look, we've seen some very marginal fee compression over the last couple of years, and we factored that in, into our projections moving forward. You know, no doubt, we don't disclose what, but you know, when we get new workplace customers in, they tend to be on a different fee structure than the older customers. And you know, but as I say, it's marginal. It's factored in. You know, that's also factored in. You can see the profit growth, given the scale. We haven't seen a reduction in revenue as a result of that fee reduction, 'cause assets are increasing. That gives us the confidence moving forward. But you know, that has been built into the projections.
In terms of... It sounds incredibly exciting, doesn't it? This kind of... So, in terms of the advice side, look, we've said 500 planners. That's our aspiration. The reason for that is that we want to become the natural national choice advice firm, Succession Wealth in there, so that, you know, this... Serving this increasing advice need that people have, we believe, you know, that that will facilitate customers that need advice from the Aviva side, customers, the growing market itself, and external. So, we are—that's kind of what we're looking at in terms of aiming for. In terms of technology, we... I talked about artificial intelligence being in the customer engagement engine. I mean, that's really, really exciting for us because what we're doing is, it's not a blunt instrument.
We're literally monitoring a series of data points or landing pages or customer behavior, and we are actually then able to go back with very timely, same day often, interactions to try and understand more about the customer, what the customer might want. So when we're seeing customer engagement from our customer engagement engine, it's actually much higher in terms of engagement response from the customer than we're seeing through traditional sources. So we absolutely believe that artificial intelligence, serving customers in the right way, can be used both in terms of a positive for generating leads, but also looking at, vulnerable customers or looking at kind of foreseeable harm from a Consumer Duty perspective. So we would be looking at using that type of technology, across the book.
Equally, from a Succession Wealth perspective, clearly, technology is something Aviva can bring something in terms of technology expertise and, and investment. And, you know, we'll be looking for becoming as efficient as we can be. I mean, James and the team are already looking at that, to help our planners and, and other support advisors. So, yeah, absolutely part of the, the plan moving forward.
Thanks, Michele.
And then I come to you, Andrew.
Thank you. Thank you. On the target for net flows, what is the critical component that needs to change to meet that target? Is this mainly workplace driven, or what is the critical aspect? Related to that, would you acquire more in addition to Succession Wealth than the others two acquisitions you've made in the last year? And then on the fee compression, can you give a little bit more granularity on how much or what you think would drive that, being an analyst and wanting to put a number into a model?
Could you just repeat the last part of the question, sorry?
On the fee compression, can you add granularity to how much or what the big drivers are, so we can get a sense of how far this could go?
Okay, so, Doug, would you like to pick up one and three, and, Michele, can you pick up the question around acquire more? Actually, should we start there and then come back to that?
Yeah, start there. Yep.
In terms of... So, our plan, as we have shared, is built upon organic growth. So, it's not underpinned by an assumption that we're going to do this inorganically. However, with Succession Wealth, we have an ambition that we would continue to grow inorganically and organically. So we have an expectation in the next couple of years that we would see that inorganic growth, where the right opportunities exist, that meet our risk and opportunity perspective of increasing, you know, flows by GBP 1 billion. That's what we're looking at. But aside from that, we would always, of course, look, but we... There's no organic growth, inorganic growth built into the rest of the plans, which is good news, right? Doug?
Yeah, I think, I think your first question was on the ambition we set for... Is it the 10% CAGR over the period?
Yeah.
Yeah, net flow. So obviously, when we set that, it was a much, much different period than where we are today with the cost of living crisis, with the Ukraine war and so forth. So, you know, we will likely fall short of that, but having said that, we're still growing quite comfortably. And as you can see, I always say, you can only control what you can control. And when we look at where we are in relation to our competitors, you know, we're holding up very well. So, it... Obviously, we need confidence to return. We're seeing a bit of green shoots in the retail sector.
But of course, things have changed in the last week or so, you know, just, you know, with what's happening globally. So, but having said that, you know, we're still having some really good growth in the business. And then on the fee compression, I mean, we are seeing very, very low—you know, one basis point, if that, per year, fee compression. And we do think there's a point where that ends, and we've sort of factored that in, into our projections. And it's not always one basis point a year. It depends on the mix of business that we're doing, depends on renewals, and depends on other things. So some years we've seen it stable, some years we've seen...
But it's around that. But you can also see on the expense side that we've been able to outperform that fee progression, compression. So, you know, that gives us confidence in the operating leverage that we have. And that's one of the reasons why you can see our operating profit growing in a greater basis than the assets under management over the 10-year period. Yeah.
And, let's don't forget, on workplace, the growth on workplace is incredibly resilient-
Yes.
As, as Michele said. You're seeing salary increases. I think you saw the numbers this morning, so, you know, 7%, I think it was, the numbers that came out on salary growth, as well as high employment rates. So that is with high retention rates on the workplace scheme. So the combination of all of that means that, you know, the flows are really holding up. So I think the team has done a great job there. Andrew?
Hi, it's Andrew Crean from Autonomous. Three questions if I can. What is your plan D C charging structure for your platform, and how will that sit relative to peers? Secondly, on your workplace business, when people reach the age of 65, what is your retention rate, on that business in terms of keeping the money? And then thirdly, I just wanted to come back on a couple of numbers you've put out. I mean, the cost income ratio in the workplace business has stayed flat at 71% for the last two years, and it stayed flat, in the advisor platform at 84%. So I can't see where the improved cost income ratios are. And secondly, when you talked about one basis point, movement in the fee compr...
fee margin, in the workplace business, it's gone from 40- 33 basis points over two years. That looks like quite substantial fee compression. And I suppose what people are trying to get to is, where's the bottom, where does that bottom out?
Yeah. So I'll take one and three, and-
Mm-hmm
... you can take two. I mean, we're not gonna disclose today what our D C charging structure is. We're doing quite a bit of consumer research and testing on different elements of it. But as you can see, in both our workplace and our advisor, you know, we will be competitive, and the value that we offer and the proposition that we bring, and we think with the scale that we have, there's reasons that we can be very competitive in that pricing. But, you know, that will come out next year.
On your third question, I mean, obviously, you know, as you can see, I think we've done quite well from a cost-income ratio, given the assets under management have actually reduced, given the market volatility. So we actually have seen efficiencies being driven, but obviously, the assets haven't grown. As we projected, they've come down and, you know, that's having an impact on why those ratios aren't changing. That will also, depending on the mix of business and what funds each workplace client is invested in, the default fund. Some choose, you know, different default funds, some choose different options. Each of those funds will have a different variance in terms of the market impact, and therefore, it's very difficult to sort of draw that back.
But we know from looking at our book that the fee compression is, you know, 1%, or if not less than that per year.
Okay, thanks. Michele?
I don't have the exact retention rate at retirement, but what I can say is that we see, you know, the workplace structure, and our platform is such that people can have option to go into more, you know, fixed term income in terms of annuities, or they can go into drawdown. So we offer the full range of retirement solutions that people need from a workplace business. One of the things I mentioned in the slide was the development of the guided retirement proposition that we're rolling out. And we see this as a really interesting and actually underserved part of the market. This is... We know that more people are having choice to make a decision and maybe potentially are not aware of the choices that they're making at that time.
They're having to understand how they balance investment with life expectancy, whether they need access to flexibility in the early needs of retirement, and also whether they want to fix in later years. So this guided retirement pathway that we're developing actually helps people move through that, and that's something we're really excited about, and that's coming - that's gonna be coming through in the early part of next year. And we see that as absolutely fundamental proposition to offer to people going into retirement, who wish to have some sort of sensible choices that they can make and help in understanding how they achieve their goals.
Thanks, Michele. Other questions? Okay.
Yeah, here is Bing Defan[Bing D. Fan] from JP Morgan. Thanks for taking my questions. So, one question from me, please. So the... In terms-- So what's the average charging structure on your workplace pension, versus, you know, the current cap set by regulators of 75 bps?
... and what's the latest on government considering raising the charge cap for funds to allow them to invest in illiquid assets? Actually, another question. Sorry, the second question is: How do you see, in terms of the purchase from retail annuities versus drawdown? Because currently, the rates are quite high, which is quite, you know, supporting the annuity. So what would you see on that one? Thank you.
Okay, thanks, Beck. Would you like to pick those up?
Sure.
I'll get the pricing.
Okay.
Yeah.
Yeah. So, I mean, our pricing on our workplace book is for members is up to 75 basis points, so that's the auto enrollment charge cap, as you suggested. It can be lower than that, but that's kind of a maximum across our workplace book, and that would include, as part of that, the platform and the default investment as well. So that's how the charging stacks up. But should you wish to have a more complex investment or some different needs, then you can have a choice of an extensive 4,000 funds I think we have available that people can look at. And that would be priced on a bespoke basis, depending upon the need.
So we feel very comfortable that we are, we are very competitive, and we are offering fair, very good value for members in terms of, solutions and platform choices.
Yeah, and on your second question, I mean, we actually have seen, particularly even in the adviser platform, we have seen it a slight... the outflows going more to annuities than you would have seen in the last few years.
Mm-hmm.
I think that's natural with the interest rates and the competitive competitiveness of annuities, and obviously, we're in the open market. We are very competitive in individual annuities. You know, that's one of the strengths of our waterfront breadth of our offering, is we can cater to all the needs, depending on if somebody wants to go in a drawdown or if somebody wants to go into annuities. But we have seen that. We expect that that will continue. And interest rates are high. They may remain high for the foreseeable future. We can't predict, but obviously, you know, that's changed the dynamic a little bit, and therefore, you know, more...
Some more of those outflows will go, and as Aviva, we hope we can compete to be able to retain more of those assets.
Thanks, Doug. Mandeep?
Good morning, everyone. Mandeep Jagpal, RBC Capital Markets. Thank you for the presentation this morning. Two questions for me, please. The first one is on the AUA target of over GBP 250 billion in five years. Just interested in understanding the drivers here between increasing or increase between existing customers who will continue to contribute, how much is from new customers, including the heritage runoff, and how much is from market levels? And the second question is on the workplace again. Your master trust has grown well historically, but it's only number five in the market. You've obviously chosen to go down an organic route going forward, but if fee margin compression was to increase more than you expected, would you consider acquiring one of the other 20 or so master trusts?
Okay.
Can I choose the first?
So-
The second one.
Yes.
Yeah.
Yeah. So I'll start with the second question first, if that's okay. Thank you for your question. Look, we started... We kind of came later to the Master Trust, proposition than others in the market, and actually, we've been spending the last couple of years really investing in the development of that, proposition in terms of tooling, features, functionality. And we feel that we're absolutely now right at the front and, and have kind of leapfrogged to a proposition that, that really is stand out. We've seen the growth in that market, outperform in terms of our market share. We've seen that continue to grow. It is a core area for us. It is an area that we believe the growth will come from.
So this is not just because we think that there will be some movements from employers wishing to go into Master Trust, but the... So the market is predicted to grow. So we believe that we will soon, you know, would be expecting to be a top one or two player in that market. That would be our ambition. Doug?
Yeah. And on the first, I mean, obviously, there's a lot of market data out there, and when you look at what we've used, it's either, I think, Fundscape or is it Broadridge?
Yes.
Data, and there's certain assumptions that are built into that. We've actually, within our projections, even gone with a slightly lower market growth assumption than what you see, which is what gives us the confidence to say that we think we can, you know, achieve at least 10% growth in the market. We've built in, you know, quite a bit of assumptions on external. I think there's upside in terms of internal. We... You heard today some of the success that we're having on conversion ratios and so forth. We factored some of that in. We would hope that we'd be able to outperform, which is why we're confident to say that we think we can at least achieve 10%+ growth moving forward.
Thanks, Doug.
I think just if I could add one last thing there. One of the things that we're also seeing is for every customer that we actually retain, in advice, we're actually seeing... So for every pound that we retain, we're seeing a pound that's coming from elsewhere. So I think, you know, that, that's a really important fact, that this isn't just about a kind of Aviva customer recapture. This is about recognizing that customers have a broad range of investments, and actually, what we're doing is seeing new growth there as well.
Thanks, Michele. Are there any... Rhea.
Thanks. Ria Shah, Deutsche Bank. Three questions. So firstly, just going back to the AUM drivers, thinking about it a different way, just in terms of the net flows, you mentioned wanting to recapture at least some of the GBP 6 billion of outflows that you see every year, how much do you want to capture back, and how much is possible over the next few years? Secondly, are we still thinking about top quartile efficiency or achieving that in the wealth proposition, and where are you compared to peers? What expense ratio is the benchmark, and what's your expense ratio compared to that? And then thirdly, just around the advice platform.
One of your peers a few years ago had a presentation and mentioned that the crucial value add is becoming the number one choice for advisers using the platform. So what proportion of your advisers who use your platform use you as number one, and where is the value add for you from converting the number twos and threes to number one?
Okay, great question. So, Michele, do you want to do one and three, and Doug, you do two?
Yeah. So, great questions. So I'll start with the net, the net fund flow. So, we have an ambition, obviously, to recapture... And I said on the slide that that's one of, one of the core reasons for the acquisition of Succession Wealth. However, not all of those outflows would go to advice, naturally go to advice. So, I mean, about GBP 2 billion of the GBP 6 billion might be logical in terms of where they are going to competitors, advice competitors, to Succession Wealth. So, how are we doing? We said we've got a 5% conversion rate at the moment. This is, you know, very early days in terms of getting that, the lead generation model working. We have aspirations to move that significantly over the next three years.
So that's something that we would expect to continue to increase. In terms of other outflows, people are looking for security, and potentially retirement, so we see and would expect to see a, you know, a continued share of outflows to annuities, which is another product that Aviva can support, and also, in terms of pension consolidation and helping people think about choices that they make. So, at the moment, I wouldn't like to put a number on that at the moment, but clearly, the direction of travel is that we would want to see that increase, and advice plays a critical role. And also, our customer engagement engine plays a critical role in ensuring customers are helped with choices that they need to make. There was another one-
The adviser platform.
Yeah. So number one. So we, we are, number one choice in the open market. It is a very competitive, it is a very competitive market, and that sensitivity, you know, it, it, it can go down to a day's trading on, on a certain day. However, we are consistently seeing market share growth the last four years, quarter on quarter. And that is a, you know, that's a real testament to the fact that we offer fantastic value for, for customers, that we've got great tooling, that advisors can use to help them serve their customers, that the the customers themselves have easy access, and there's a high degree of automation. So, you know, we are very, very confident that on, on the open market, we are a natural and already a natural choice.
Whether the fund flows are one or two, it's a very small sensitivity in terms of how that works. But we are outperforming the market in terms of the market share that we have and the fund flows that we're seeing.
Thanks, Michele. And Doug, on the efficiency?
Yeah, I mean, our ambition is to be top quartile. There's no doubt about that. I'm looking at Charlotte right now because we have a lot of a lot of conversations.
We may chat about it occasionally.
I mean, one of the challenges is disclosures, you know, by our competitors and, and so forth. So it's difficult to get some of the granular information, particularly in workplace, from what we know and what we've we look at, and obviously we have some people that move from one sort of organization to another. We believe we are top quartile, and you can see that in the profitability of the business. There's obviously more available in the advisor platform space. I think at the moment, we're probably middle of the pack, Roger, but we have seen, you know, two basis points improvement year-on-year. And you know, the ambition is to be top quartile, but I think there's some further benefits to come from that.
Obviously, our direct wealth is still subscale, but I think it's being able to leverage the existing platform that we have, and we're quite confident moving forward, and the ambition, once again, would be to focus on that efficiency. So I think as we move forward, we might have further information on that, but some of that is also predicated on what is out there in order to compare. And I know we have a lot of discussions internally, but clearly, our ambition is to be top quartile.
Great. Thank you. Okay, are there any other questions? Tom? Okay. Yeah.
Sorry. I'll try to keep it quick. Thank you for letting me ask a follow-up. Just on the workplace, could you just give us a sense of how much of that business is intermediated by the consultants, and what proportion is direct or comes through another channel? And then, I suppose, I have a slightly different sort of question, which is, some people are quite excited about collective defined contribution as an alternative to, you know, link workplace or indeed, old style DB. I'd be interested in your reflections on whether that's something you folks think could be interesting in the market or not.
Okay.
Yeah, Michelle?
Yeah. And I might ask Emma, actually, to-
Yeah
... comment on this one, so it might be worth having the mic.
Can we get a mic to Emma?
The workplace market is pretty much intermediated either through corporate IFAs or EBCs. So that's how we trade. So it's really important that we understand what they need and how they represent it, and this is one of the reasons why we feel that from a kind of consumer duty and a member perspective, you have the Pensions Regulator, you have the FCA, you have independent governance committees that Aviva has, and then you have Master Trust trustees in terms of Master Trust, and then you have a corporate IFA or you have an EBC. So this is all of those structures look after the interests of the members. So we're well positioned in that market.
Our reach into that community is incredibly high. You know, our number one position makes us, you know, across those market segments, we have fantastic relationships there. So that's, that works really well for, for moving forward. Perhaps Emma-
Yeah, Emma, would you want to pick up the question on CDC- DB?
Yeah, absolutely. So, collective DC is something that we're looking at quite closely at Aviva. I do think it's quite an interesting third way, particularly for decumulation. So what it will give you will be that income for life, but not guaranteed in the way that DB was, and so then still subject to investment fluctuation. So it's absolutely something that we're looking at. It's something that we will be well placed to do in the market. Current pensions minister absolutely loves it, but, you know, who knows what will happen under a Labour government? But this is something that, you know, we're well placed to look at, and we're very much in the debate on all things CDC.
Thanks, Emma. Don't forget the 70% win rate on schemes. Down to your team, Emma.
Right.
Well done. Okay, so look, I'm gonna close it there. I just want to say thank you to everyone for coming this morning. I appreciate that you sort of had a meeting that you were at before you came here. Hopefully, you can see the level of excitement we've got on wealth. The team will be around for a coffee if you have any further questions. But just really appreciate you coming, and any other follow-up, you can follow up with the IR team. So, have a good day. Thank you.
Thank you.
Thank you.