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Opportunity is lost as stakeholder steamrollers in

IFAs are probably hoping stakeholder proves an elaborate April fool.

Stakeholder could prove disastrous and at best will cause a great deal of pain for limited benefit.

Thousands will misbuy because the 1 per cent charge cap precludes advice. Several traps, including the relationship with state benefits and contracting out, have been left unsprung. Decision trees completely failed their consumer testing, with few bothering to complete them but the regulator brazenly claimed a success.

The FSA, DSS and Treasury are placing different emphases on advice. On a harsher interpretation, they have recently contradicted each other. Stakeholder also risks widespread blight because it ignores all proven sales channels.

It has brought the worst short termism from ministers when a U-turn on the 1 per cent cap was the honourable course while a small group of cheerleading providers allowed the Government to claim industry support when honest criticism was required.

It is also exposing the naivety of some national newspapers as they promote a “great deal for consumers” while providers are pulverised in the act of providing it.

Bizarrely, many IFAs will still prosper, shifting to fees, cross-selling to employers or finding consumers, daunted by the mess, paying for advice. Yet for some firms it will be a stake through the heart.

The saddest thing about the stakeholder is it is just three or four significant but easily taken steps from success. It is financial services&#39 greatest missed opportunity in the last 20 years.


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Tuesday, 3rd April 2001.Type: Cafeteria-style protection plan covering accident, sickness and unemployment cover, critical illness cover and life cover.Maximum benefit: 125 per cent of mortgage payment.Benefit payment term: Up to 24 months.Deferred period: 30 days.Premium: £6.06 per £100 of cover.CRITICAL ILLNESSMinimum premium/cover: None.Maximum cover: None.Illnesses covered: Cancer, heart attack, kidney failure, heart valve replacement or […]

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Life of the third party

In the pension market, it has been normal in the past to either carry out administration in house or to use a third-party administrator either on a stand-alone basis or packaged with an investment facility. But the onset of stakeholder has led to a significant change in the market. Stakeholder has meant providers have made […]

L&G admits it pushed for the 1% regime

Legal & General is coming under fire from IFAs for boasting that it actively promoted 1 per cent charges on stakeholder from the outset of the planning for the product. L&G says it was the only insurance company at the Government&#39s earliest working parties on stakeholder agreeing with a 1 per cent charging cap. In […]

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Trapped between expectations for near double-digit returns and strong apprehensions about investing in persistently volatile markets, investors worldwide are of the opinion that professional financial advice is worth the fee. But even though they believe individuals who work with a financial professional are more likely to achieve their goals, investors have a clear vision of […]


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