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Reasons to be fearful

This business with stakeholder is getting quite ridiculous, not least


because the media are whipping it up into an issue of frenzied paranoia


bearing little if any relationship to the attitude of the industry itself.


First, customers are supposed to have freedom of choice, aren&#39t they? Or


is the Treasury intent on taking that away? Commission-free contracts mean


fees, the alternative being a commission-paying product. Let the client


choose how he wants to pay. I will not work for sixpence ha&#39penny per case


because I cannot afford to and nor can my business.


I have overheads and regulators&#39 fees and heaven knows what in the way of


regulations themselves to observe. If the client does not want to pay at


all, then he can go elsewhere to some bargain-basement bucket shop that


will give him an execution-only service and nothing else.


Second, virtually all the life offices to which I have spoken view


stakeholder as just another tedious distraction with no profit margin and


about as much potential for significant lift-off as Isas at supermarket


checkouts. Remember that plan?


Running group pension schemes (responsibly) is an expensive overhead for


any IFA practice. Stakeholder commission without fees will be such that


economies of scale simply will not enter into the equation. IFAs who


believe they can make money on stakeholder schemes by writing them as


loss-leaders into other areas of business will find them to be long-term


millstones.


If the Treasury is intent on forcing IFAs to recommend stakeholder


pensions to everyone, then why haven&#39t we been forced hitherto to recommend


nothing but non-commission policies for everything?


Good old Equitable Life springs to mind. What a brilliant investment


anything in any fund of theirs would have been. And cheap as well.



Julian Stevens


Partner


WDS Independent Financial Advisers,


Kingswood, Bristol

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