latest Content

Commission payable post 2016 on platform bonds and pensions

Commission will be payable post 2016 on some platform-held life bonds and pensions, attendees of the Migrate Workshop were told. ABR editor Rob Kingsbury picks five ‘take aways’ from the event held on 10 September in London.

1. Commission post 2016

Skandia will continue paying commission post April 2016 on life bonds and pensions held on platform because the ‘sunset clause’ described in the FCA’s platform policy statement PS13/1 – Payments to platform service providers and cash rebates from providers to consumers applies to platform distributed products, while Skandia bonds and pensions are distributed by the Skandia life company.

Mike Barrett, platform marketing manager, Skandia, said: “For ISAs and collectives there will come a day in the run up to April 2016 when commission will be turned off but that is not a case for any other product on the Skandia platform. So for our bonds and pensions the commission rules allow for advisers to continue receiving commission post April 2016 and you will do so.

“The regulations within the platform paper apply to platform service providers only and the question to your provider is: How is the business set up and how is it distributed? For Skandia our platform service provider distributes our ISA and collective business, our bonds and our pensions are distributed by our life company, therefore they are not caught up by the platform rules.”

Andy Coleman, director of distribution Cofunds confirmed that Cofunds can continue to pay commission on its life bond but the Cofunds Pension Account is not a life product so falls within the platform rules.

2. Transitioning assets

Moving assets from legacy (flavour of the month) products that clients may have accumulated over their savings and investment lifetime into a more streamlined offering held on a platform allows for:

* Institutional quality of investment approach

* A more controlled investment approach

* More effective risk monitoring

* Closer fit with a fee-charging structure

* Better investment experience for the client

* Less administration for the adviser business

* More revenue for the business.

3. There’s a business cost to transitioning

Transitioning can help change a firm’s business model into one that is more efficient, cost effective, and better revenue generating – but firm’s have to accept there is a business cost to that transformation.

4. The FCA will be suspicious of…

When transitioning the FCA is likely to be suspicious of 100% transfers as this looks like churning. The regulator expects that some legacy products will remain suitable for the client and will not need to be moved to new products or share classes.

5. Adviser firms should have D2C propositions

The “fastest growing segment on Cofunds is D2C business which is being carried out by financial adviser businesses.” – Andy Coleman, director of distribution Cofunds.

Firms are using technology to deliver a ‘lighter touch’ service for accumulator clients who don’t need full financial advice now but want to do business with a trusted brand, need some generic guidance, and are happy to transact themselves.

This is an opportunity adviser firms cannot afford to overlook. “If you don’t look after your wealth accumulators you’re not going to be able to back fill your client book as your decumulators decrease in number – they are the future of your business.” – Mark Polson

Best quote from the day: “Be proud to charge for the value of what you do.’ Mark Polson


More Articles Like This