Selestia managing director Brett Williams has hit out at Prudential UK chief executive Mark Wood's stance on with-profits, saying his comments stem from a vested interest.
Wood criticised Hargreaves Lansdown at a Money Marketing round table on with-profits last month, saying its decision not to offer with-profits bonds was a “dereliction of duty”.
But Williams says this is wrong, pointing out that IFAs have no duty to sell “life offices' old-fashioned products” as their duty lies with their clients.
Writing in MM this week, Williams says in an increasingly litigious world, clients must understand the risks they take with any investment decision. However, he does not believe it is possible to assess with-profits risk due to the opacity and discretionary nature of the product.
He also says that smoothing can only work against today's investors although it did work for investors in the past when reserves were large.
Williams says: “I know what I would call a 'dereliction of duty'. It is life offices encouraging clients to invest in something which is opaque, where there is a massive potential conflict of interest between the decision makers and investors and where asset allocation has been driven by the needs of the decision makers.”