P eter Jordan is on a crusade, his mission as Skandia's head of pension marketing is to “battle it out” with the insurance industry establishment over the touchy issue of with-profits.
He says he starts “every day on a war footing” with the ultimate aim of breaking down the inertia in the insurance market which has built up around with-profits policies and orphan assets.
But rivals would perhaps take a different view of his holy war. They might describe him more as someone sniping away at the core of the UK life insurance market than a crusader, fearing that if he and Skandia are successful in their quest, it could fundamentally change the way they can conduct business.
Jordan says: “The aim of the battle is merely to achieve a level playing field on which all pensions and life insurance companies can compete.”
But he claims his ultimate target is to provide the consumer with what they want and need and not with what is good for the industry or what it perceives the consumer wants. He slams the whole concept of with-profits for its lack of clarity and also the way actuaries in darkened rooms have total discretion over the way that bonuses are calculated and paid.
He believes in the unit-linked ethos of transparent charging structures with an evangelical passion, so much so that he thinks with-profits should not just be reformed under the FSA and Sandler reviews, but scrapped. Although he accepts this is unlikely due to the intense lobbying that will come from the big players with vested interests in the market.
His loathing of with-profits goes back a long way, 19 years to be precise. But he says it really developed about 16 years ago, when he was dealing in endowments and it struck him how illogical the concept of with-profits actually was.
“It was back in the early 1980s when working at Clerical Medical that I saw with-profits for what it is, an outdated mechanism that is no longer relevant in the modern world. At the time, rival companies began manipulating returns on policies, paying high terminal bonuses that were not supported by investment returns.”
A short spell at unit-linked stalwart Allied Dunbar in 1986 and then the Life Association of Scotland only served to confirm his views and a move to the Fidelity Investments pension team strengthened his opinion further.
Jordan now believes the same manipulation is happening in the stakeholder market as big life offices use orphan assets from with-profits funds to pay IFAs high levels of unsustainable commission in a bid to gain market share.
“The economies of scale just do not stack up. Companies are paying commission so high that it has become divorced from the product's charging structure and they are using marketing budgets supported by with-profits funds' orphan estates.”
I t is for this reason that Jordan wants the FSA's with-profits and Sandler's long-term savings reviews to push for root-and-branch reform of the entire with-profits issue.
“I believe any investment should be fully defined, with as little discretion from the those running the fund as possible and if there is any discretion this should be closely regulated. We need wholesale reform of with-profits and how inherited estates are used.
“These estates have an awful lot of cash and the life offices use it at their will in an anti-competitive way to boost market share. This insanity needs to be removed and all products should be self-supporting.”
Despite backing Sandler over reviewing with-profits, Jordan is sceptical about the remit in looking at commission bias among IFAs. He argues that it does not matter how an IFA is remunerated although he believes fees and commission should be expressed in a like-for-like manner to show the true cost of both methods of paying for advice.
Jordan is equally passionate about his leisure activities and is well known for his charitable work which has raised more than £100,000 for various causes over the last couple of years.
As a keen runner, Jordan regularly completes the London Marathon in around 4 hours 15 minutes, raising cash for children's sports charity Get Kids Going. His other great sporting passion of golf has seen him raise money through organising local tournaments.
He is also happy to admit that he does not mind exploiting his business contacts to raise an extra few quid, much to the chagrin of the Skandia's fund management contacts – and even Money Marketing reporters, some of whom have been coerced into running marathons too.
He readily admits: “I am very keen on getting people off their backsides to do stuff every year.”
Putting many of us to further shame, Jordan is also involved in helping run a local soup kitchen in Southampton with his wife and colleagues.
As to his future, Jordan cannot imagine not working for Skandia, describing it as his “spiritual home”.
But despite his forthright views on a number of key industry issues, Jordan has a relatively low profile in life insurance circles outside of Skandia, with rivals claiming to have heard of him but never to have met him. Perhaps rivals should take a leaf out of Jordan's book and get off their backsides to find out a bit more about this potential threat to the status quo.