The unholy mess into which the industry seems have got itself trying to function in the ridiculous and destructive 1 per cent world is, in my opinion, principally the fault of most of the life companies themselves.
Anyone with an ounce of business sense must have known right from the start that the entire 1 per cent proposition was and is an unworkable and damaging proposition. Yet what did nearly all of them do? Gave in and restructured almost all their personal pension products to meet the 1 per cent straitjacket.
I raised this 18 months ago with our local Standard Life office. Why do something that will, so obviously, lose Standard Life money and damage your supporting IFAs?
Fear, was the answer. Fear of being seen not to conform, fear of a large outflow of funds to competing 1 per cent bancassurer products and fear of being shunned by IFAs who would feel compelled to place future business with other offices who have conformed to the 1 per cent world. All of which, I suggest, shows a pretty sorry lack of confidence in the Standard Life brand name.
What about Standard Life's class-leading with-profits pedigree (notwithstanding concerns about current reviews of with-profits funds)? What about their new and largely well chosen (if as yet modest) range of third-party unit trust funds? What about the difficulty that any competitor would have in justifying a transfer of funds from a good Standard Life pension plan (not least because of loss of waiver of premium and possibly life cover on many pre-April 2001 policies)?
What about the effect of slashing commission on all existing business already on the books of their huge supp-orting IFA base, which means that incremental business will wither on the vine (as it has)?
What about the fact that people buying primarily on price won't pay fees for advice, which means that new business also will dwindle (as it has)? What about…..oh, I give up.
How did the people making these sorts of strategic corporate decisions ever get to where they are now?
Like so many other life offices, Standard Life should have had the guts to stand up and say no. Instead, they chickened out and look where we are now.
WDS Independent Financial Advisers, Kingswood, Bristol