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Cazalet predicts stakeholder slaughter

Influential analyst Ned Caz-alet has predicted that stakeholder will

initiate widespread slaughter in the life industry while claiming that the

IFA sector is due for a radical shake-up.

In his influential Life 2001 report, Cazalet says IFAs will decrease in

numbers by a third over the next five years. He criticises their “generally

limited skill base”, lack of financial resources and high average age.

Cazalet believes there will be a split between giving financial planning

advice and specialist investment advice which he believes IFAs will have to

farm out.

As final pension liabilities become clear, there will be further

consolidation in the IFA sector, with established players stepping in to

set up multi-ties.

The report says: “It would seem that best-in-class multi-ties with product

and fund decision-making outsourced to well qualified and well resourced

third parties should boost the productivity of the former IFA without

materially disadvantaging his clients.”

Cazalet warns that the financial strength of the life offices has been

severely weakened and the low stakeholder charges will result in “many more

losers than winners”. He points out that no office has more that 5.7 per

cent market share while many agree that 10-15 per cent is required to make

stakeholder profitable.

He also claims companies have been living in a “fools paradise” by writing

with-profits business without taking into account the cost of guarantees

and option.

DOCE:

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