The PIA is to allow product providers to direct mail stakeholder pension clients that have been in...
The PIA is to allow product providers to direct mail stakeholder pension clients that have been introduced by intermediaries, writes Robert Stock.
The low margins of stakeholder and the integrated use of direct mailing by product providers in the stakeholder marketing process could combine to produce disintermediation between IFAs and their clients.
PIA guidelines on Indirect Benefit covering the provision by product providers of 'tree-walking' services and direct offer literature on behalf of IFAs were released last week. These services provided by life offices are considered the only way in which IFAs can market stakeholder cost effectively.
The guidelines state that product providers can distribute literature on behalf of IFAs who have advised a corporate client on the designation of a particular scheme providing the literature does not "promote" the IFA.
They also state that representatives of product providers providing 'tree-walking' services for IFA's cannot give advice and the service is not restricted to a specific IFA.
Malcolm Mitchell, joint managing director of Plan Invest Group, said: "Currently, it is generally accepted that any sales of additional products made to IFA-introduced clients by life companies will pay commission to the original introducer of the client."
Mitchell acknowledged there is pressure for that to change under the stakeholder regime where margins for product providers are much finer. Under that scenario the product provider can market other, higher margin products directly, disintermediating the IFA.
Adam Norris, managing director of Hargreaves Lansdown Pensions Direct, agreed there was a serious threat of disintermediation in the envisaged sales process. He said it was ill-advised for any IFA to allow life companies direct access to their clients.
Norris said that many IFAs could not compete for marketing expertise with life companies and risked ultimately losing their clients. He said that HL Pensions Direct did not allow life companies to contact its clients without its written agreement.
He said: "Any IFA that allows a life office direct access to their clients is giving away their biggest asset which is the client."
l Full details of the PIA guidelines are on ifaonline.co.uk
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