Scottish Life has welcomed the recent paper "Delivering value to middle Britain", published by the Finance & Technology Research Centre (F&TRC), for stimulating discussion about the future of pension advice for those who fall outside the high net worth bracket.
Lorna Blyth, Investment Marketing Manager at Scottish Life, said:
"The F&TRC paper should be praised for raising the issue of providing pensions advice to the mass affluent1 at a time when many commentators suggest advisers should disengage from the sector. While acknowledging that advisers will often want to continue providing a service to individuals who are not "high net worth", the paper raises a number of important points about the economic realities of delivering that advice. These include the requirement for ongoing reviews as well as investment solutions and support activity.
"To keep advisers' costs - and therefore client charges -- as low as possible, the most obvious solution for the "mass affluent" is a guided investment approach with automatic rebalancing. This significantly cuts the adviser's costs and also provides a consistent asset allocation approach with consequent compliance benefits. This model can be delivered to the client by using either a platform or a life office. However, as the F&TRC paper points out, use of a platform places more demanding obligations on the adviser, because of the requirement for due diligence and suitability templates which have no direct equivalent if a life office is selected."
At present, there is no easy way for IFAs to compare the cost of using a platform with the cost of using a life office. However, Scottish Life has developed a calculator which enables us to provide advisers with an indicative cost comparison between our Pension Portfolio and their choice of platform.
Lorna Blyth added:
"Scottish Life is not suggesting that switching pensions onto a platform is wrong. But we strongly believe that it's certainly not always the best choice for the client, in terms of costs versus investment returns. Stimulating the debate, about how advisers can ensure they are delivering the most cost-effective solution to each individual client, can only be a good thing for the market as a whole."
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