View more on these topics

Outside edge – Equitable Life

Last week the chairman and chief executive of Equitable Life published an advertisement in a national newspaper and sent its with-profit policyholders a letter “seriously questioning” the motives of IFAs who recommend their clients switch from the stricken life office to another provider.

Opposite, Money Marketing publishes Equitable&#39s letter in full. Below, a leading IFA writes to Equitable&#39s policyholders.

Equitable Life: the way backwards

Let us talk about confidence. How confident would you be about investing your money with a firm who appear to have consistently mismanaged their financial affairs over many decades? A firm who, having lost a High Court action, later confirmed by the House of Lords, had to do a deal with their investors whereby the investor gives up a certain guarantee in return for a fairly derisory cash enhancement now. All this in addition to a previous reduction in their investment value and a vicious penalty if the investor decides to move elsewhere?

You might not actually have much confidence in the future abilities of such an organisation and you would have every right to feel this way. What might be worse would be if the firm in question had historically bad-mouthed independent practitioners because they were paid by commission and they had never paid commission to such practitioners themselves. Almost hypocritical you might say.

Equitable Life and its managers are a disgrace. This is a firm which has badly treated and served its customers and yet appears to lack the ability and integrity to say it is sorry.

Instead, it continues its attack on the independent sector by sending out an ill-thought through and derogatory letter suggesting that clients view with scepticism advice they receive from IFAs.

The Chairman and Chief Executive write to policyholders explaining that those clients leaving the fund will pay a “financial adjuster”. What weasel words these are – why not be honest and call it a penalty?

They go on to state that a replacement policy may incur an “entry fee” which they say could be as high as 5 per cent with higher ongoing charges. Worryingly they continue to beat the old drum “this often generates commission income for IFAs” and therefore policyholders should “seriously question the wisdom of such advice”.

I agree that clients should always question advice, this will ensure it is robust. Clients should also seriously question whether these men have got what it takes to manage the future of Equitable. On the basis of what we have seen so far that is doubtful.

Charges and fees are important, there is no doubting this. Yes, IFAs recommending a transfer out of Equitable Life may well be paid commission on such a transfer. But remember many IFAs will charge a fee instead of commission – and many will reduce their commission entitlement in order to reduce the financial costs of such a transfer.

What is no doubt recognised by the IFA sector, but so obviously missed by the Chairman and Chief Executive is that the demand for transfer advice is driven by the Equitable Life policyholders. Had they bothered to ask they might have discovered this.

Equitable Life continues to waste its clients money by issuing letters to attack the IFA sector – and still no word of an apology.

Read between the lines “we will continue to protect policyholders&#39 interests by ensuring that those who choose to leave early do so without damaging the fund”. Don&#39t hold your breath.

A market value reduction (penalty) of 20 per cent within 3 months? Who knows.

But given the choice of a well run, well managed product provider with the potential to make my clients money grow or Equitable Life you can bet your life confidence lies somewhere other than the latter.

Nick Bamford is managing director of Informed Choice


NFU Mutual appoints new managing director

NFU Mutual has appointed Ian Geden as managing director. Geden – who is a director of Mutuo, an organisation which campaigns for a better understanding of the benefits of mutuality – steps up from general manager, a position he has held for 3 years. He succeeds Andrew Young, who has retired after 37 years with […]

IFAs handicapped in the selling race

Back in 1990, I was playing golf with an estate agent and we got into a deep conversation about the effectiveness of restrictive covenants. After all, that is what you talk about when the golf is of a low standard. Suddenly, he asked me for the use of my mobile phone and disappeared into a […]

Skipton ropes in growth

Skipton Building Society has brought out another tranche of its five-year guaranteed growth bond that is linked to the FTSE 100, S&P 500 and Eurostoxx 50 indices.The bond guarantees the return of the original capital, plus a minimum return of 22 per cent regardless of what happens to the indices. The maximum potential growth is […]

Parental leave and pensions

Fiona Hanrahan  – Senior Product Insight and Technical Support Analyst We are often asked how parental leave impacts workplace pension schemes in terms of funding in general, auto enrolment and salary exchange. This article will explain each of these. How does parental leave impact the funding of workplace pension schemes? A member of a defined […]


Natixis Global Asset Management’s quarterly Portfolio Barometer offers insights into UK financial advisers’ model portfolios and the allocation decisions they are making. Natixis’s Portfolio Research & Consulting Group works with financial advisers and other intermediaries to analyse and enhance their model portfolios and help them develop investor portfolios suited to today’s complex markets. The Portfolio […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers. Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and thought leadership.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm