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Stakeholder proposition has stalled

I am amused by the story that actuaries have their sums wrong over stakeholder (Money Marketing, August 19). Yes, of course they have, but as things stand at the moment, no matter how high the annual management charge, this will always be the case.

By removing front-end loads and surrender penalties, it is like a car manufacturer giving away new models for free and hoping to make money by adding a little bit on to the cost of servicing the vehicle. At any time, the person who bought the car can take their vehicle to be serviced elsewhere or swap the car for a new model.

The Treasury has now allowed the dealer to increase its servicing costs by 50 per cent. So what? In a competitive market, the increase cannot be passed on to the consumer and the purchaser can still go elsewhere at any time. If the higher cost is passed on to the policyholder, it makes it easier for another garage to service the vehicle at a lower cost later.

The only way that this can work is if the purchaser is tied to a dealer for a number of years using capital units or if there is a very significant change to the way that the product is manufactured and distributed. Until this happens, we can increase the annual charge as much as we like but stakeholder will still not be viable.

Jason Hurley

Head of sales and marketing,

RGA UK Services,


Consumer question

Sesame&#39s latest protection offering makes for interesting reading for intermediaries. The whole-of-market solution offers less commission than the multi-tie and for the first time, a super-multi-tie is suggested, offering what we might describe as super-commission. Who are we to criticise? The FSA is depolarising the market and such incentives may become commonplace. But one question […]

Get into training

I recently visited some clients to discuss options for constructing a broadly-based portfolio of investments for mediumto long-term growth but, eventually, for income. Their risk profiles ranged from two to nine on our notional scale of one to 10, so I thought it might be appropriate to consider a with-profits bond for some of the […]

Legal & General – Capital Protection Plus 6

Type: Guaranteed equity bond Aim: Growth linked to the performance of the FTSE 100 index Minimum-maximum investment:£500-no maximum, Isa £7,000 Term: Six years Return: The greater of 26% of original investment or 50% growth in index Guarantee: Original capital returned in full along with 26% growth at end of term regardless of index performance Closing […]

&#39Women struggle to get top roles in mortgage sector&#39

Mortgage firm Cartel claims some rival companies still refuse to take women seriously at senior management level. Recruitment director Andrea Brammer says women face huge obstacles getting jobs in the mortgage sector and those who do then hit a glass ceiling when looking for promotion. Brammer claims many women do not even think of applying […]


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