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Aifa calls for fee for suite advisers

Aifa is warning that product providers and IFAs may still need a higher initial charge to make it worth their while selling the Sandler stakeholder pension.

The call comes less than two weeks before the Sandler suite including a pension,medium-term investment fund and a child trust fund charged at 1.5 per cent which can be sold with basic advice, comes into force.

Aifa director of policy Fay Goddard says: “What still has not been recognised by the Government is the up-front costs that IFAs have to pay to provide basic advice.”

IFAs says the move to increase the commission cap from 1 per cent to 1.5 per cent has failed to excite the market, with many complaining they will still be unable to sell the business profitably.

Chase de Vere pensions technical manager Elizabeth Gibling warns that the Sandler proposals could strip many IFAs of their bread and butter commission.

Pensions Transfer Solutions managing director Carl Melvin says the increase is “pathetic” and that selling the new stakeholder pension would cost the IFA money.

IFAs are wary of the new basic advice regime although some acknowledge that paraplanners could be used to sell the new suite with a script.

John Scott and Partners research and investment manager Patrick Connolly says: “This is not something that we are planning to do and I have not heard that it will be done widely in the market.”

Goddard also says the basic advice regime could further hamper take-up of the stakeholder pension among IFAs. She says: “Most IFAs will not want to go through the scripted questionnaire process. Sticking to a rigid questionnaire is for sales – IFAs give advice.”

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