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Rob Reid: iPensions, please

Last week saw us at the Turnberry Hotel for the Money Marketing Retirement Planning Summit, where we listened, debated and networked like our lives depended on it.

This event always has its moments and this year was no exception. John McFall delivered a keynote speech and then took an impressive number of questions. Apart from plugging his next think tank – he clearly believes in a portfolio of activities since his days as an MP – he cleverly referred back to the previous speaker for some sort of validation, irrespective of the reasonableness of the connection.

When I suggested to him that the unions had sleep-walked through the rush from defined benefit to defined contribution, with the reduction in contributions not finding its way back to the members, he did what all politicians do and answered a different question.

When I then suggested that Labour treated pensions with contempt, given the 18 or so people who held the post of pensions minister, he remembered he had to go. The one major step forward he can take credit for is his wish to establish a pension strategy – out with the short-termism that is the UK political spectrum.

Regrettably, he had no new ideas about getting people to save and saw no problem in Nest expanding its brief to the detriment of current providers. He waxed lyrical on the Dutch and Danish systems but did not seem to recognise the risk that comes with their solutions. What really struck me was the total absence of new ideas.

In the age of the iPad, we need an iPension if we are to engage the mass market. Auto-enrolment will not cut it, compulsion is inevitable and then the level of contributions need to be sensible or politicians will find themselves in deep trouble.

This week sees the Tisa workshop on employee’s covenants and following on from the Raymond James’ victory over Towry Law. This event needs to focus not on these two companies but on the crazy concept of client ownership. I am firmly in the camp that it is not a non-dealing clause that retains clients, it is a service that people appreciate and value.

The flaw is that people base valuations on the quantum of trail commissions, when profit is far more reliable.

This takes me back to my recent comments on self-employed advisers, over which I was taken to task by my pal Nick Bamford, who suggested the self-employed option is not just about capital adequacy reduction.

I remain unconvinced that if you do not own the clients your asset base will be negligible or, as I once stated, your assets have legs.

The summit finished with a round of golf at the prestigious Ailsa course. I reflected on what I had learned and wondered that if adviser-charging is still to be fully sorted in terms of VAT and unauthorised withdrawals, then it is not only the exams that could prevent a smooth transition to 2013. Any ideas that August is just for holidays could be commercially fatal.

Rob Reid is managing director of Syndaxi Chartered Financial Planners @reidremoney



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There are 2 comments at the moment, we would love to hear your opinion too.

  1. Soren Lorenson 7th June 2012 at 9:16 am

    What is an iPension? If your great idea is no more than a ‘hip’ name then its even worse than what the Government is offering which at least has some substance (even if its substance is misguided).

    As an IFA I discourage most employed clients away from pensions. Unless you are a business owner the tax reliefs simply do not compensate for the ever changing rules and restrictions on access.

    We expect people to be responsible enough to save for retirement but the minute they get there we treat them as irresponsible and assume that unless they are heavily controlled they will blow the lot on luxury cruises and Mercedes Benzs.

    So what if they do…it was their money!

    So, Mr Reid, here’s some substance for your iPension. It should be a mixture of ISA and Pension combined with pension tax relief. There would be a contribution limit and people would be able to access some or all of the money in the fund during their working life with the tax relief clawed back. If they wait until retirement and work within certain rules they can have the income paid tax free.

    Finally…set the rules and legislate so they cannot be changed ever for existing investors.

    Then finally people may have confidence to invest.

  2. I was at the same MM event when Lord McFall spoke. What was most bizarre is that the Independent Workplace Retirement Income Commission he established actually has some very good stuff in it about the problems & solutions of engaging the masses to save for their future. Having read the report beforehand I couldn’t understand why he didn’t use the chance to show case the report and to explain what he is planning to do with it. Instead it seems that all he has achieved is to alienate all the attendees.

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