Regulators and, in particular, politicians dabbling in pensions hold short-term positions but exercise enormous power over pensions and investments which will not mature until long past their sell-by date
Attempts to reduce pension costs below a reasonable level to enable a proper marketing fee (commission) to be paid or to remunerate decent fund managers could well result in a failure to sell stakeholder or to produce good returns.
Equitable had higher charges than stakeholder to sell its products yet still ran into difficulties. Consumer associations promoted Equitable because of its lower than average charges but at what price now?
I also understand another company notable for promoting the whole concept of “cheap” tracker funds with similar charges to stakeholder has yet to make a profit on its operation after five years. And stakeholder funds are predicted to require 10 years before making a profit.
If we ran our operations as small IFAs in this manner, we could not meet the financial viability requirements and would soon be forced out of business.
Lower costs are promoted largely on the back of future projections which have yet to be earned. Actual historical returns suggest that successful investment returns often come from a company with relatively high charges.
Quality is rarely cheap.
Frank Dennis Investment Services,Walsall