Terence O’Halloran may be holding out valiantly for the cause of with-profits but I have just seen a leaflet from Norwich Union to its with-profits holders which, in an obliquely abstruse and roundabout way (it might, in fact, have been written by someone at the FSA), appears to give advance notice of “financial incentives” for “eligible policyholders” (who stick with their with-profits investments).The leaflet does not quite say what these incentives might be or why they are being considered, only that NU is “considering a reorganisation of some of its with-profits funds” that might lead to some sort of incentive being offered to “eligible policyholders”. The leaflet then goes on to warn policyholders against switching out of or encashing their with-profits investments with NU, as doing so might have an adverse effect on their potential eligibility for these mysterious incentives. Whatever these incentives turn out to be, they will need to be pretty darned good to make up for the past three years of miserable returns from with-profits funds, not to mention the outlook for future returns. It would be interesting to know from where any such financial incentives might be conjured, given the decidedly low horsepower of NU’s recent and current levels of reversionary bonuses, not to mention the all-round decline of interest and faith in all things with-profits. Not only is hardly anyone committing new money to with-profits (if anyone at all) but most people already in with-profits are looking keenly for the least damaging exit route. I know that is what I am hearing from an increasing number of my clients. Is this a last ditch attempt to staunch what many perceive to be an irreparable and ever growing breach in the levee? Looking idly through the jobs section of last week’s issue, one ad in particular caught my eye: Bancassurance at its best. Would you like: A basic salary of up to 38,000 a year?
A final-salary pension scheme?
To drive a Mercedes?
12 appointments made for you each week?
To earn in excess of 100k?
I certainly would. However, notable by its absence is any mention of things like after-sales customer care, technical support, ongoing training, an ethos of customised financial planning reports or any of those other things that good IFAs regard as the best things about being an IFA. All this ad is about is how much money the successful applicant might earn – a total package that one might reasonably estimate would cost the bank in question about 150k a year.
Just how much business would the successful applicant have to write to justify such a package? One hell of a lot. He wil have to be a virtual selling machine. What type of business? On what terms other than the absolute maximum commission that could be squeezed out of every single sale?
Will the successful applicant be expected to do anything at all in the way of servicing the affairs of existing clients or conducting periodic reviews of products sold in the past? Somehow I very much doubt it, unless, of course, s/he has the stamina for a 20-hour working day.
All this ad is about is attracting people willing and able to flog the bank’s preferred product lines by the bucketload.
Yet the FSA’s latest mystery-shopping exercise apparently reveals deep-rooted commission bias and glaring deficiencies in advice. With jobs like the one above, how could the way in which bank “advisers” are driven to perform have the slightest hope of being any different?
The evidence is so apparent and so easy to identify that one has to wonder how the FSA could possibly fail to be aware of the principal environments in which customers are simply flogged products which deliver maximum commission backed up by cut and paste post-sale justification letters simply to get each case past the compliance people? Julian Stevens