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Aegon warns over offering Nest as a loss leader

Aegon has warned advisers of the possible dangers of installing Nest for small firms on a loss-leading basis.

Last week, Nest managing director of customer and proposition Graham Vidler said it is encouraging advisers to help small and medium-sized businesses set up the scheme.

When asked how advisers could charge for this “delegated access” service, Vidler said they could levy an upfront fee or offer it on a “break-even” or free basis as a loss leader and make money selling other services.

Aegon UK regulatory strategy director Steven Cameron says: “The RDR is all about advisers being really clear with their clients what services they will provide and how much those services will cost. It would be unfortunate if that clarity becomes diluted. This kind of arrangement muddies the waters.”

Vidler says: “A range of intermediaries are seeking to deploy our delegated access function using different approaches. Some charge fees for advice and implementation, such as helping with communications and administering Nest. Some offer administration of Nest on a ‘break-even’ basis, then charge fees for other services.

“We are not suggesting advisers load the cost of advising on Nest. We are simply highlighting the innovative ways intermediaries are seeking to provide support and are structuring their business in light of the opportunities automatic enrolment can bring.”

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Comments

There are 7 comments at the moment, we would love to hear your opinion too.

  1. If memory serves, AEGON shafted themselves financially by engaging in the stakeholder pensions debacle. Ten years ago somebody from AEGON admitted to me that they were losing money hand over fist on stakeholder. I asked on what basis they’d ever thought it would be any other way. He had no answer.

  2. Thanks for the warning, but I haven’t noticed a seething hoard of advisers offering free NEST advice as of yet.

    If an employer doesn’t value the input enough to pay a fee, they can do it themselves and good luck.

  3. I think the response from the IFAs that replied to the last article was fairly clear. Anyone in our role who sets these things up for free must be mad!

    I will quote one of my fellow IFAs who summed it up perfectly as far as I am concerned

    “………. one couldn’t dream of recommending it in the first place. It has a complicated legal structure, no track record, uncertain charges, limited investment choice, restrictions on movement of funds all being run by a firm that specialises in making steel, land rovers and Tetley’s tea bags.

    That would make for an interesting suitability report!”

    I wholeheartedly agree sir!

    How could any good IFA seriously recommend a product like that! Its another Pension Review massacre against us waiting to happen. Steer clear methinks, we have had our fingers burnt too many times by the Governments bright ideas and then them turning on us!

    We are here to give advice not flog products, and NEST is not a product I shall be recommending!

  4. john joe mcginley 8th February 2013 at 10:31 am

    Why give away your experience, empathy and expertise for nothing? I agree 100% as a profession we do not sell products its advice and that must have a price attached.

  5. Alistair Paterson 8th February 2013 at 11:06 am

    This is the next miss-selling scandal.

    I’m out.

  6. Re – NEST
    All advisers need to adopt a common policy of non involvement unless the government is prepared to fund the advice process as it is a government scheme not an industry scheme and in effect out of our remit as it doesn’t form part of the whole of market requirements as we cannot sell it or choose suitable providers from definitive and reliable data.

    Wealth warning – giving advice on NEST could seriously impact on your PI costs and if in future it is found to be flawed, you may be held responsible for its failure.

    The set up costs for the first ten years are ridiculous.

  7. I sat with a client yesterday and advised that there were a range of options, including NEST. However, if they wanted to take that route they would have to do it themselves. The alternative was I could set up a scheme and give them ongoing advice but there would be a fee for my time and expertise. Client felt that they would rather pay me than do it themselves, even if it cost them more.

    Simple and straightforward. Pay or sort it yourself!

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