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Investment switch as half of IFAs cut pension focus

Nearly half of IFAs have reduced their pension focus as a result of falling margins from stakeholder, according to Money Marketing and Virgin One&#39s State of the IFA Nation survey.

IFAs also fear the kitemark on stakeholder will lead to widespread misbuying as people will rely on the Government&#39s stamp of approval when making their pension arrangements.

The poll of 280 IFAs found that 48 per cent of IFAs have done less pension business following the introduction of stakeholder.

The survey reveals that at a time when the Government is at pains to encourage pension provision, IFAs are pulling out of advising on pensions because of the squeeze on margins.

IFAs say they are more likely to focus on investment business, with 85 per cent saying this was most likely to replace pension business. Mortgages came next with 47 per cent, followed by tax planning and long-term care, both on 39 per cent, with health insurance last at 25 per cent.

Seventy-three per cent of IFAs believe stakeholder&#39s kitemark will make consumers believe that buying a stakeholder is a simple decision and will end up with an unsuitable product.

Some IFAs, however, remain very optimistic about the pension market, saying if IFA firms have invested in good systems then pensions is a growing market.

IFAs also say they want one set of designatory letters after their names to drain the alphabet soup that currently exists, with 88 per cent supporting the move to produce one standard qualification.

Roberts Clark director Ashley Clark says: “There is a massive stakeholder misbuying risk in choosing the wrong provider and choosing the wrong funds and there is a suitability risk. If you cannot get access to good quality advice, you may end up missing out on other more appropriate products.”

•Survey details, p10

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