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‘Life links still the biggest challenge’

Life links are still the biggest distribution challenge facing boutique fund managers, according to SVM.

Speaking at the Money Marketing boutique roundtable last week, head of retail sales Mark Noble said there was a demarcation because whereas an underlying asset on a platform belonged to the client, a unit linked bond belonged to the life company.

Noble said that although life companies were forced down this route because of tax rules, it meant that running funds became more difficult because of the complete lack of transparency.

He said: “You can scream at a life company asking them where this money has come from and they won’t tell you, which is a concern because that is the least transparent money we have got.”

Noble added that he had some sympathy with life companies because they were forced to be slower in the market as they are more expensive to run.

Noble said: “There is a real chicken and egg story to adding a fund link to a life company because the first thing they will look for is IFA demand, which means they will want you to quantify with IFAs who will subsequently turn around to us and say they can’t recommend a fund unless it has a link.

“There is also the problem of life companies tending to want a bigger slice of the pie than platforms,” he added. “So if you’re a boutique running funds with capacity constraints there is a reluctance to put all these fund links on, even if there was demand. It also hard to break through the IFA door with one fund link. It needs to be two or three at least.”


Groundhog Day

So just what is a simple product? One of the RDR’s key arguments for the devolution into primary advice is that most lower-paid consumers are so confused by the existing range of products that they refuse to take out savings and pension plans. The FSA believes that the arrival of simpler products will stimulate a demand among these consumers.

Freedom of choice

FSA head of retail investment policy Andrew Sykes looks at the new rules governing the way in which firms use assets to back the benefits paid by unit-linked policies

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