Legal & General

Legal & General is a UK multinational financial services company. Its products include life insurance, general insurance, pensions and investments, and it has operations in the United Kingdom, Egypt, France, Germany, the Gulf, India, the Netherlands and the United States.

It has traded in one form or another for 176 years and the company’s ethos is summed up in a quote from the CEO, Nigel Wilson: “through the commitment of our people, we have consistently delivered high quality services and offered competitive, value for money products. We want to continue to provide people with financial solutions and services that allow them to plan for their future, to deal with the most exciting, critical or difficult financial moments in their lives.”

As at 31 December 2012 it had total funds under management of £406 billion.


In 2010, to ensure compliance with the FSA RDR initiative, Legal & General Group undertook a review of its risk attitude assessments, fund risk classifications, and the way it communicates risk and its consequences to its customers and partners. The Group operates through a wide range of channels and seeks a balanced approach across the distribution options. Considerable efforts are made to ensure investment options are rated defensibly using objective measures overlaid with cautionary subjective assessments. The Group, mindful of its stature and responsibilities, is perhaps characterised as risk averse; its general risk rating is more loss-avoiding than reward-focussed. The Group also prefers the competence of advisors to the potential for systemic risk in alternative formulaic and prescribed channel processes.

The FSA RDR initiative provided an opportunity to revisit the assessment of investor risk attitudes and communicating of risk to partners, channels and customers, and to consider how customers’ risk attitudes can be effectively measured to inform the advisory process.

Legal and General engaged with Oxford Risk to seek education and guidance on these issues.


Oxford Risk created a major seminar attended by key senior managers. Topics covered included:

  • Risk, uncertainty and regulation, how people perceive risk in everyday life, judgement, biases and miscalculations.

  • Customers and Risk in Financial Services, risk from an investor perspective v. the industry’s measures of risk, the principles and best practice of Customer Risk Profiling, the science behind understanding customers risk attitudes.

  • The regulator’s concerns.

  • Mapping Investor to Investments.


Senior managers and decision makers within Legal and General were briefed on the latest research and development within investor Risk Profiling from thought leaders including Lord Krebs from Oxford and Professor Peter Ayton of City University. The relevance of Risk Tolerance, Risk Capacity & Goals and other useful dimensions of financial personality were explained; as was the importance of working with the customer’s perspective, preferences and time horizons. The speakers also discussed whether risk preferences were single or multi-dimensional, and how to gauge the relevance of complex and special investments to a customer based on their risk profile.

The managers were able to take the information provided and use it to influence their new post RDR propositions.