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't 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'penny per case
because I cannot afford to and nor can my business.
I have overheads and regulators' 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
If the Treasury is intent on forcing IFAs to recommend stakeholder
pensions to everyone, then why haven't 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.
WDS Independent Financial Advisers,