IFAs now account for 60 per cent of a growing individual life and pension
market, and totally dominate pension sales, filling thegap left by the
demise of many direct salesforces.
ABI figures for the first quarter of this year show IFAs took 80.6 per
cent, or £577m, of individual pension sales, up from 63.4 per cent or
£351m last year, while direct sales halved from 32.1 per cent to 16.1
Life and pension business rose to £2.6bn in equivalent premium income
from £2.4bn in the same quarter last year. On the individual side,
IFAs did £1.3bn worth of business, up from £1.1bn last year.
Richard Jacobs Pensions & Trustee Services managing director Richard
Jacobs says: “These figures show the continuation of a trend although it is
surprising to be that high in individual pensions.
“Drawdown is getting increasingly complicated. It is not for the financial
planner but for a pension specialist. It is the IFA target market. The
figures are excellent but from every other quarter changes are being made
to lessen the role of the IFA.”
Whether the IFAs' grip on the pension market will change as stakeholder
takes effect remains to be seen.But the independent channel which is being
eroded by Government and regulatory review, is taking a bigger share of a
Of course, the numbers of IFAs and direct salespeople have changed
dramatically over the past year and finding an authoritative source on the
extent of the changes is difficult. In the first quarter of this year
alone, there were nearly 5,000 direct salesforce redundancies.
According to figures given to the LIA from the FSA database, IFA numbers
have increased by 29 per cent in the past year from 28,230 to 36,365
although the FSA press office suggests its official figures put the number
nearer 26,000. Direct-sales numbers fell to 46,593 from 63,000.
Given the decline in salesforce numbers, the boost in IFA sales could be
seen as simple arithmetic, given that many direct salespeople have become
ABI spokesman Vic Rance says: “IFAs have always been in a strong position
in pension and group business by the very nature of the business. Some
companies have been giving up on direct salesforces and, if they were to
move in to the IFA sector, it is straight arithmetic which will boost the
IFA figures. I suspect these figures are mainly due to the move from direct
sales to IFA.”
IFAs have certainly cleaned up on the cuts in direct sales. Telesales and
direct marketing have yet to make an impression and still only make up a
minuscule proportion of market.
Big players such as Prudential and Britannic are ploughing money into
phone and internet sales at the expense of direct sales and must be banking
on a quick surge from consumers.
Some life offices, particularly the IFA-only offices are prepared to see
the figures more positively.
Clerical Medical spokesman Tony Bloomer says: “You have to ask the
question why direct salesforces are collapsing. It is clear they are not
financially viable but that is because they were just not getting the sales
“These figures prove the point the IFA proposition works. Independent
access to everything in the market has been working. This is great for the
IFA market and for IFA companies like ourselves who have been gaining
market share and growing new business figures.
“Consumers want to speak to people who can cover all the issues and
receive advice from a professional adviser rather than a limited choice. We
just hope the Government is getting the message that the independent
channel should be preserved.”
IFAs are taking heart from the ABI figures and are hoping the Government
and regulator will consider them carefully in the next stage of the
Roberts Clark principal Ashley Clark say: “The figures speak volumes
despite the fact the Government and the FSA appear to be hell-bent on
undermining the value of seeking independent advice by introducing these
“The general public have proven they are not fools. Why is the FSA
muddying the waters on what a direct salesforce/multi-tie is, when the
public clearly wants to buy from independent sources?”
Despite upheaval in the industry from changes to polarisation, the
introduction of stakeholder and lower margins, IFAs are still clearly
coming out top, particularly in the pension arena.
Jacobs says: “I hope these figures make the powers that be aware of the
reality. If there was such a trend in any other industry, people would
recognise its strength. The public is voting with its feet and whatever the
Government is trying to do to us, we still manage to come through.”
Perhaps it will be the first quarter figures for 2002 that will tell the
full story of the hold IFAs have on the market. By then, the outcome of the
polarisation review will be known. The ext-ent of the impact of stake-
holder on the individual pension market and new distribution channels will
be app- roaching their zenith.
But now, while polarisation is theoretically under review, IFAs are hoping
these figures will speak for themselves.