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Aegon boss Grace writes to Webb: ‘We’ve lost the plot on consultancy charging’

Adrian Grace
Grace will propose a series of good practice requirements.

Aegon chief executive Adrian Grace is writing to pensions minister Steve Webb outlining concerns about the impact a ban on consultancy charging would have on automatic enrolment.

The letter will focus on two key issues – the importance of helping small businesses with limited resources choose an appropriate pension scheme and the need to engage employers so they encourage their employees not to opt out.

Grace will argue that consultancy charging is central to achieving both of these aims.

Speaking to Money Marketing, Grace says: “We seem to have lost the plot on consultancy charging. The key driver behind whether an employee gets the right pension or not is an engaged employer.

“But you are less likely to have an engaged employer if an adviser is not involved.”

Grace says Aegon will propose a series of good practice requirements to encourage advisers to use consultancy charging responsibly.

These include clearly disclosing charges to both employers and employees, eliminating any charging agreements deemed to be excessive, developing more flexible charging structures so an initial consultancy charge can be spread over a period of up to five years, and urging advisers to ask employers to pay fees for certain overheads.

LEBC divisional director of group savings and investments Glynn Jones says: “The main risk with banning consultancy charging is that small employers will not take advice and their employees will end up in the wrong pension scheme as a result.”

Radcliffe & Newlands chartered financial planner Mel Kenny says: “Employers need to be engaged in auto-enrolment but I do not think consultancy charging is the answer. I prefer to invoice the employer directly so the employee sees the full benefit of contributing.”


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There are 9 comments at the moment, we would love to hear your opinion too.

  1. he sounds like he would do a better job than the minister. well done

  2. That is what the MAS is for, after all it is “free” and gives “advice” just as our regulator and politicians want to happen.

  3. Well done Adrian. It’s good to see some good old fashioned common sense in this debate. And good to see a provider in our (adviser) corner for a change. I sincerely hope Mr Webb takes your valid – and well articulated – concerns on board and does the right thing. Banning CC outright is completely counter to the government’s plans to make Auto-enrolment work and to get employers and employees engaged in saving through affordable professional advice.

  4. Of course it would be good to invoice the employer directly but many simply will not pay for advice in that way. If consultancy charging is banned then we will have an even bigger pensions crisis than we already have.

  5. I’ve never been a big supporter of AEGON (Scot Eq) in the past, but from what I’ve seen in the press over the past few months, I’m re-evaluating that. They are the only company that have been brave enough to stand out from the crowd, on this and other topics, and put forward sensible ideas. Where are the other “IFA friendly” providers in this debate. Come, let’s hear what you’ve got to say. Congratulations Adrian.

  6. It may be an idea for Aegon to get to grips with adviser/consultant charging on their own existing book on business first as they are making a pigs ear of it at the moment!
    How many years have they had to get it sorted and they still cannot add an on-going adviser charge on ANY of their pension plans.

  7. Not accurate DQ. We use their One Retirement product where we can add AC online as part of new business, ad-hoc is the same. Their platform works the same way for our higher end clients which is good for consistency.

  8. Pension take up is low, the RDR has passed and AE has started…. yet we have a massive question mark over how an adviser can charge for advice when involved with a company’s pension scheme.

    It’s important that this is settled FAST as companies are seeking advice but there are major questions over the options open to employers and their advisers.

  9. There is another way. Look at what we’ve built a
    Employers will pay for services they value. AE is not about product, it is about services to employers and employees.

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