Scottish Equitable is targeting high-net-worth clients with the flexible pension plan. This is an individual personal pension with a difference as it has insured and self-invested options supported by a menu-based charging and commission structure.
The pension is part of Scottish Equitable's wealth management business proposition, which caters for the needs of professionals, the wealthier self-employed and company directors. In particular, this pension is designed for clients who have at least 10 years to go before they retire and who can commit to pension contributions over the long-term.
The insured part of the product allows clients to choose up to 14 funds from a range of 40 internal funds and 26 externally managed funds. They can also choose the lifestyle option which invests in funds with greater growth prospects at the outset, then moves into lower-risk funds as retirement approaches.
The self-invested option, which is administered by Sipp provider Personal Pension Management Ltd (PPML)gives clients wider investment choice. This element is linked to a fund supermarket administered by Fundsdirect and also allows investments into asset classes such as commercial property.
The charging structure of the flexible pension plan separates the cost of advice from the cost of the product, so advisers and clients are able to agree an appropriate charge for the level of advice given. This is based on an establishment charge which varies according to the type of contribution and the type of commission the IFA wants to take.
This product may be praised by IFAs because it offers a solution to the problem of the 1 per cent world squeezing out scope for commission. It may also be useful for high-net-worth clients who prefer paying for advice through commission than fees. However, some clients and IFAs may feel that in trying to be innovative, Scottish Equitable is trying to do too much within one product.