Seven Investment Management - Success Story
See update below
7IM Customer Profile
Seven Investment Management (7IM), founded in 2002 by Justin Urquhart Stewart and Tom Sheridan, is headquartered in London and has additional offices in Edinburgh. Total assets under management currently stand at £18.7bn and it employs more than 350 staff.
7IM provides investment services to professional wealth managers, planners, advisers and private investors for both accumulation and decumulation phases. 7IM services include discretionary investment management, multi-asset portfolios, an investment and open architecture trading platform and a fantastic app, 7IMagine, which brings client portfolios to life on their device of choice.
2023
Challenge
Pension Freedoms created a huge opportunity for financial advisers as the decumulation market moved rapidly from a position where more than 90% of pension assets were being moved into an annuity at retirement (therby being lost to further chargeable financial advice); to a situation in which advisers could participate in optimising clients' retirement income into and through decumulation - potentially increasing the length of client engagements by more than 20 years.
Unsurprisingly, many wealth managers realigned their businesses to focus on helping those approaching and in retirement to optimise their retirement incomes. For its part, 7IM chose to create its 7IM Self Invested Personal Pension (SIPP) to sit alongside its long-established General Investment Account (GIA) and Individual Savings Account (ISA) offerings.
7IM became an early adopter of the highly innovative Secure Lifetime Income (SLI) offering from Just. This enabled advisers to easily incorporate an element of guaranteed income for life alongside clients’ chosen investment strategies in order to produce a more sustainable, yet flexible, retirement income for all clients.
7IM then built and rolled out its Retirement Income Solution (RIS) to new clients, and more recently extending access to advisers of existing clients, to ensure that all 7IM clients’ needs are being planned for and their retirement incomes optimised both at onboarding and review stages.
7IM partnered with Dunstan Thomas to build underlying stochastics-based calculation engine and build easy-to-use, highly graphical interfaces for 7IM’s Retirement Income Solution
Following the success of building and going live with the 7IM SIPP in early 2019, 7IM turned to its established technology partner Dunstan Thomas to ask it to build a new stochastics calculation engine, and a series of highly intuitive graphical tools designed to help advisers configure retirement income options and determine likelihood of being able to sustain a client’s desired retirement income expectation through the life of new plans.
The brief was to create interfaces for 7IM’s RIS which, supported by Dunstan Thomas’ new stochastics modelling engine, could help advisers to recommend the right mix of investments, model portfolios, mapping onto their clients’ risk profile and 7IM’s unique ‘bucketing’ approach to ensure investments are aligned with risk profile, while setting aside enough cash to see out periods of turbulent market conditions without having to crystallise short-term investment losses.
Once circumstances change, income needs can be adjusted and then calculations re-run to establish ‘how much money is likely to be left at the end of the plan’ based on favourable, neutral or unfavourable market condition scenarios offered via Dunstan Thomas’ stochastics modelling engine.
In addition, Dunstan Thomas created an option of being able to ‘Add other income’ part way through retirement. For example, many 7IM clients retire several years before their State Pension age. However, when they reach age 66, they might want to configure in a reduction of retirement income being taken out of their Income Drawdown plan to reflect the additional income that the State Pension is set to deliver. A further retirement income source could be added when a spouse reaches his or her State Pension age, for example, and the probability of being able to sustain retirement income through to term again recalculated.
On 13th December 2022, the ICX-built 7IM RIS portal went live for new clients and Phase II development began. Phase II opens the portal up to existing clients and offers them a range of capabilities associated with pension reviews. Various scenarios trigger reviews. For example, every 12 months, holders of 7IM’s RIS plan can be sent a review document automatically once their adviser has approved it. If still on track, according to all parameters pre-set in discussion with their adviser, then no further action is taken other than making an Annual Pension Benefit Statement available via the portal.
The portal can even automatically calculate buy and sell requirements to re-balance the portfolio at review; while portfolio adjustments themselves are still handled within 7IM’s existing investment management systems underpinned by Pershing.
The review period is also an opportunity to consider whether retirement income needs have remained static or moved up or down. Annual escalation levels may be adjusted to reflect increases of inflation for example. Alternatively, the client may decide to take a break from drawing income or utilise his/her cash pot if wanting to avoid crystallising losses in period of declining equity markets.
A range of scenarios from larger withdrawals, to topping up and taking a decumulation break, can all be explored, and the calculation engine will be put to work to assess ‘sustainability’ probability changes as a result of any adjustments.
Paul Pavlou, Proposition Analyst, 7IM:
“Dunstan Thomas’ stochastic modelling engine, together with the power of its Integro CX framework has made it possible to build retirement income-taking scenarios. Given a mix of investments, model portfolios, and other parameters, advisers can quickly re-calculate the likelihood of being able to maintain pre-set retirement income levels needed to assure a comfortable living standard in retirement for clients in planning or review modes.
“This is what our customers, guided by their advisers, want to ensure. Their pensions and other investments must give them a strong probability of achieving their retirement income goals. RIS has been delivering that for new clients for six months already and now, following completion of Phase II, a comprehensive wrap around Annual Review can be rolled out to our existing pensions clients too.”
Results
Dunstan Thomas has been instrumental in helping 7IM build a market leading platform for retirement. Key achievements include:
- Bringing advisers a new retirement income offering (RIS), focusing on giving them a robust repeatable process and easy to understand communications to help give clients security and peace of mind at the same time as supporting their regulatory requirements.
- The combination of 7IM’s RIS, Just’s Secure Lifetime Income and its highly flexible SIPP onto 7IM’s award-winning platform gives advisers a true ‘one-stop shop’ for providing retirement income in a high service environment.
Benefits
Paul Pavlou, Proposition Analyst, 7IM:
“Dunstan Thomas is exactly the sort of long term technology partner 7IM needs as we continue to build out our Retirement Income Solution (RIS) offering for our advisers. They helped us to create the 7IM SIPP back in 2018/19 and continued developing and implementing sophisticated user interface tools and technology-based solutions ever since. Their new stochastics-based modelling engine, combined with highly intuitive and graphical user interfaces, all underpinned by Dunstan Thomas’ ICX portal technology, are all working well to engage advisers and their clients alike.
“They are supporting advisers and users of RIS to have access to increasingly sophisticated retirement income options. Ultimately, they help us to deliver a smoother, more efficient and consistently high quality service to our customers which, in turn, fosters customer loyalty – meaning clients are more likely to keep their assets on our platform for longer and throughout their retirement journeys.”
Looking to the future: Guaranteed Income option with the retirement income flexibility of a SIPP
7IM sees decumulation market innovations like the Secure Lifetime Income (SLI), which it may embed into 7IM’s RIS during 2023, as yet another retirement income option designed to make it easier for 7IM’s clients to assure themselves that they will not run out of money in retirement.
For customers, the choice between the certainty of an annuity and the flexibility of a SIPP can be a difficult one. SLI offers them both simultaneously. It addresses the inflexibility of traditional annuities, while delivering a high guaranteed income until death. As such, SLI is a genuinely innovative product developed by joint venture partner of Dunstan Thomas called Spire Platform Solutions.
Uniquely, SLI provides a meaningful pay-out on early death as well as an early encashment value. In addition, any income, lump sum death or encashment payments are paid into the SIPP cash account and can then be distributed in line with client wishes – all while still delivering guarantee lifetime income at least equivalent with a conventional annuity. SLI is only available on an advised basis.SLI is a complete proposition which includes quick end to end online ‘quote and apply’ service including individual underwriting, quoting, purchase, client money reconciliation, daily valuation, re-purchase and illustrations.
The technology has been designed for use by advisers and their clients. The technology behind it uses the latest Microsoft stack of technologies and uses components from Dunstan Thomas including Integro CX, Imago Administration and Imago Illustrations – leveraging the experience of software already in wide use within the 7IM RIS platform.
2021
7IM SIPP passes £1.5bn AUM Milestone
Dunstan Thomas Imago Administration underpins 7IM SIPP STP policy opening
7IM Self Invested Personal Pension (SIPP) has now attracted over £1.5bn in assets under management (AUM). The 7IM SIPP, which launched just over three years ago, has proved to be popular with an increasing number of its advisory partners.
7IM has devoted considerable resources to offering advisory firms a high-quality digital user experience on its platform. It has also enabled Straight Through Processing (STP) of new 7IM SIPP applications and transfers-in, including accepting electronic applications signed using established digital signature offerings such as Adobe Sign and DocuSign. 7IM’s adoption and integration of Origo Options Transfers has also been instrumental in enabling rapid re-registration of assets to speed up Transfers-In.
All new SIPP applications are automatically passed straight through to Dunstan Thomas’ pensions administration solution Imago Administration for making new applications live within 24 hours wherever possible.
The pensions technology firm Dunstan Thomas helped 7IM build its SIPP which was launched in May 2018 and Dunstan Thomas now administers all 7IM SIPPs using its Imago Administration software and outsourced pensions administration service.
Dunstan Thomas Imago Administration also underpins the 7IM Tailored Drawdown offering for those in-retirement and looking to decumulate in a more flexible, potentially more tax efficient manner using all Pension Freedoms options including UFPLS, drawdown and ‘drip feeding’ tax free cash withdrawals in decumulation.
Dunstan Thomas Imago Illustrations also provide recently re-designed and simplified pre-sales illustrations and annual Statutory Money Purchase Illustrations (SMPIs). These illustrations have proved more client-friendly as they highlight valuation and charges information in a summary section on the front page and document length has been reduced to two pages.
2019
Dunstan Thomas were chosen by 7IM for:
- Best of breed SIPP administration functionality
- Feature-rich software ‘out of the box’ with scope for customisations to fit 7IM requirements
- More than 30 years’ experience in supporting leading SIPP and platform providers
- Ability to quickly build strong, collaborative working relationships
- Eliminated need for 7IM to find ‘difficult to recruit’ specialist pensions administrators
- Enabled 7IM to get to market rapidly with its new SIPP, while meeting stringent regulatory requirements
Project Challenge
Pension Freedoms opened up a huge opportunity for financial advisers as the decumulation market moved rapidly from a position where more than 90 per cent of pension assets were being moved into an annuity at retirement (thereby being lost to further chargeable financial advice); to a situation in which advisers could participate in optimising clients’ wealth right through retirement - potentially increasing the length of client engagements by more than 20 years.
Not surprisingly, many wealth managers realigned their businesses to focus on helping those approaching and in retirement to optimise their retirement incomes. For its part, 7IM chose to create the 7IM Self Invested Personal Pension (SIPP) to sit alongside its long-established General Investment Account (GIA) and Individual Savings Account (ISA) offerings – thereby rounding out its Retirement Income Service and ensuring that all in-retirement clients’ needs were being met.
Solution
7IM partners with Dunstan Thomas to build & administer new 7IM SIPP
Following a selection process in which Dunstan Thomas proved both its SIPP administrative capability and ‘can do’ attitude, 7IM elected to partner with Dunstan Thomas to build its SIPP product and the pensions administration system to underpin it.
7IM's Chief Operating Officer:
“We decided we did not want to build a pensions system ourselves - so we needed to find one that was ‘ready to go’. We also had to consider how much of the associated pensions administration we wanted to run ourselves. It’s not a great idea to employ 10 people to help you administer a new product when you are unsure of the level of business that will flow from the new product.
“We wanted an external firm to both provide the pension system and administer it for us as an outsourced admin service. We looked around the market and, having conducted a comparative evaluation, came to the view that Dunstan Thomas had the best SIPP administration system and outsourced service offering, all underpinned by the market-leading Imago Administration system.”
Dunstan Thomas worked alongside a dedicated technical team within 7IM to collaboratively design all administrative processes around the new SIPP, ensuring tight integration with 7IM’s existing systems.
Dunstan Thomas also provided automatic cash matching to 7IM as part of its comprehensive suite of pensions admin services so that pension contributions received collectively into 7IM’s accounts via its GoCardless Direct Debit system, could be apportioned accurately to the correct individual pension accounts automatically, all via Imago Administration.
Dunstan Thomas helped 7IM to complete all SIPP design and administrative processes to the satisfaction of all parties ahead of 7IM securing regulatory permissions ahead of 7IM’ SIPP Rapid collaborative work by Dunstan Thomas’ team enabled 7IM to go live successfully with its new SIPP in May 2018.
Results
Straight Through Processing
Imago Administration now provides all administrative functionality to 7IM’s SIPP including: client search, onboarding, policy set up, transfers-in, contribution changes and associated reporting to the bank, FCA and HMRC. Imago Administration also provides workflow and work management capability in the background which helps deliver all this at a lower per unit cost than would otherwise be possible. Portfolio adjustments remain within existing 7IM investment management systems, underpinned by Pershings.
Once integration work has been concluded with already available Dunstan Thomas interfaces, client onboarding will become part of the automated suite of Straight Through Processes (STP) orchestrated by Imago Administration
Benefits
The value of 7IM having its own SIPP looks clear when you analyse that more than 50 per cent of all 7IM-managed assets are already held within a pension wrapper. Clearly, it makes sense for a good portion of those assets to be held within a 7IM-owned pension wrapper rather than a number of other providers’ products. Dunstan Thomas offers 7IM’s preferred route to a fully automated STP service using its best-of-breed Imago SIPP administration tools and the option of full or partial outsourcing of pensions administration servicing.
Chief Operating Officer, 7IM, again:
“Dunstan Thomas is helping us to deliver a smoother, more efficient, and consistently high quality service to our customers which should also make it easier to command their loyalty – keeping their assets on our platform for longer - right through their retirement journeys now.”
7IM has already found now that it has its own SIPP, several wealth management groups are showing a more active interest in moving clients over to 7IM’s platform. The word is spreading that 7IM is not only great at managing investments on its platform but also they can put it in a relevant tax wrapper, thus catering for a much larger percentage of customers’ investment requirements, while seamlessly providing all operational and administrative requirements.
