Aviva (LSE:AV.) has benefited from a significant shift in strategy over the past few years as the insurer streamlined its business and emerged from weaker parts of the business.

This restructuring helped improve the stock’s rating. But the bigger question now is whether a second phase of growth is beginning to emerge.

With the inclusion of Direct Line in the group and the further development of the property and pension sector, can the company’s shares continue to surprise the market?

Wealth management

While Aviva shares are still widely viewed as a time-honored insurance play, a closer look at the business suggests the earnings structure is constantly changing.

One of the biggest drivers of this change is wealth management.

The UK wealth market could grow from around £1.6 trillion today to over £4.3 trillion over the next decade as rising retirement savings and long-term demographic trends continue to boost demand. This represents an opportunity for structural growth rather than a short-term cycle.

The company already has a significant presence in this market, with assets under management of over £234 billion across its wealth companies. It also has a built-in customer advantage, with millions of UK customers and a enormous base of mass affluent households who can, over time, cross-sell pension and investment products.

Most importantly, in addition to its core insurance business, management is increasingly positioning assets as a capital-driving growth engine. With the development of employment platforms, advisory services and direct property offerings, the group is gradually building a more diversified earnings base that is less dependent on time-honored insurance arrangements.

Cash flow

What makes this opportunity more compelling is not only the size of the market, but also the quality of the cash flows driving it.

Much of the augment in wealth comes from occupational pensions, where employees and employers make regular contributions. These flows are highly resilient, with the extensive majority coming from existing members. This makes the revenue base much more predictable than many other financial services companies.

The model also becomes very sticky over time. Retirement relationships in the workplace often span decades, from early career saving to retirement planning. This creates many opportunities to serve the same customers with additional products. Today, 7.2 million customers have more than one policy.

Moreover, the market itself is still developing. Automatic enrollment has already resulted in a significant augment in occupational pensions. However, continued increases in premium rates and long-term demographic trends suggest we still have a long runway ahead of us.

Taken together, recurring revenue, long-term relationships and structural growth give the wealth industry the potential to become a reliable engine of future returns.

What could go wrong?

The main risk to the wealth story is that while workplace pension flows are highly recurring, returns are still partially tied to financial markets. A weaker investment environment could reduce asset values ​​and dampen fee growth, even if premium levels remain stable.

There is also some dependence on long-term policy direction, particularly around pension reforms and auto-enrolment rates, which have helped the industry grow.

Nevertheless, I think this stock is still worth considering. In recent months since the withdrawal, I have strengthened my position. I still think Aviva has the potential to surprise the market over time.

Is it worth investing £5,000 in Aviva Plc now?

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Andrew Mackie owns shares in Aviva.