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Pension IFAs set to polarise

Pension IFAs look set to split between offering independent advice for high-net-worth clients and multi-ties for the mass market as a result of the FSA&#39s polarisation and commission proposals.

IFAs operating in the top end of the pensions market such as in Sipps and SSASs are thought likely to stay independent as many already work on a fee basis.

But those currently working mainly on a commission basis look most likely to multi-tie.

Intelligent Pensions director Steve Patterson says: “The pension market will segment. Delivery to the mass market has to be through commission, so the multi-ties will clean up. People in the high-net-worth area are used to paying fees anyway and IFAs in this area will become more like consultants.”

Some in the industry believe IFAs operating in the individual pensions market may migrate towards more corporate pensions business, which is already pre-dominantly fee-based.

Clerical Medical pensions strategy manager Nigel Stammers says: “The corporate pension market may offer more of a haven for IFAs, where fees are accepted.”

Smaller IFAs say they will not be able to afford to advise on any regular-premium pension business with the up-front fee system the FSA wants to introduce. They say their only option is to pursue existing business, which can provide enough commission to offset against a fee.

Roberts Clark director Ashley Clark says: “There is not enough remuneration in the regular premium market to offset commission, unless you operate on a true fee basis. This means the end of regular-premium pension business for me. I&#39m now only interested in the transfer of existing schemes and lump sum work.”

The industry believes the plans may be aimed at boosting Government plans for pension simplification in an effort to encourage multi-tied advisers to sell pensions to the mass market.

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