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
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
He also claims companies have been living in a “fools paradise” by writing
with-profits business without taking into account the cost of guarantees