Customers who buy pensions and insurance policies through IFAs are more likely to continue contributing to them, according to the latest FSA persistency report.
Compared with policies sold through tied agents, IFA-sold contracts maintain grea ter continuing contribution levels, causing industry exp erts to question why the FSA is preparing to change the current polarisation regime.
Research on policies sold through IFAs shows that, after four years, contributions are still being made to 82 per cent of endowment policies, 65 per cent of personal pensions and 77 per cent of whole-life policies. For tied agents, the figures are 76 per cent for endowments, 58 per cent for pensions and 64 per cent for whole-life plans.
The report concludes: “Policies selected from the whole of the market by an independent financial adviser have a better chance of meeting the needs of the investor.”
The sixth annual persistency report, conducted by research company DVL Smith, show many customers say they were not informed at point of purchase of the consequences of stopping payments into their plans.
Experts say higher persistency through IFAs is a clear endorsement of the independent advice channel.
Aifa director general Paul Smee says: “This is further evidence of the better quality advice and products provided by IFAs.
“It makes one wonder why anyone would consider changing the distribution channels when independent advice clearly works so well.”
IFA Pensions & Invest ment Management principal Phil Moore says: “I want sales that stick, I want sales that remain on the books. These numbers indicate that other IFAs are as dedicated to the sales process.”