For the first time in IFA Ian Cooper's career, he has completed a whole year without writing a single piece of business through a life company. Here, he explains why...
Cooper, principal at Cheshire House Financial Planning (an AR of Positive Solutions) and an IFA of 25 years, told IFAonline insurance companies' poor service had left him looking stupid in front of customers too many times.
So what happened to make Cooper change the way he had been doing business for a quarter of a century?
"In a word, the change is platforms," Cooper said.
Cooper's business is 90% investment based and it has been going mainly to Cofunds, with the rest to Fidelity FundsNetwork.
"Beyond this, I have only written one piece of business direct with a fund house, because of the very specific requirements of the investment."
2. Lack of trust
"I have lost trust and faith in the service and products offered by life companies. You can't trust what they say will stay the same from one year to the next. How can you work like that?"
3. Too clunky
"Life companies have incredibly inflexible systems."
Standard Life's wrap platform restricts investors to using 11 funds in a SIPP. While de-risking a client's portfolio at retirement, Cooper switched out of one fund and into another, briefly breaching the limit.
"It caused the client to lose all online functionality. Standard Life had to do an internal pension transfer just to return the use of the tools. It went to a lot of effort free of charge but it shouldn't have been necessary."
Aviva's wrap platform has also caused Cheshire House problems.
"One guy in our office who started using it found it had been set up incorrectly by Aviva and the charges were higher than he had thought."
4. Small is beautiful
"Insurance companies now are too big and weighed down with legacy business problems following mergers."
Cheshire House uses a small independent actuarial firm based in Manchester to do most of its valuations. It also does a lot of business with wrap platform Parmenion.
"Positive Solutions is starting to take serious notice of Parmenion. It is really flexible and very willing to accommodate clients' needs - the complete opposite of the big insurance companies."
5. Call centre chaos
"Life company call centres are dire. Axa's in particular struggles on a number of levels."
The life companies respond:
Axa: "Axa Wealth's adviser support unit (ASU) is made up of experienced pensions administrators who are targeted to resolve a client query at point of contact.
"Sophisticated call handling technology ensures an adviser gets through quickly to the relevant contact. New pre-sales illustrations are dispatched within four hours and produced by accredited individuals."
Standard Life: "Standard Life offers a very flexible range of investments on its SIPP platform.
"The only restriction is on the number of insured funds a customer can hold at any one time. There is no restriction on the number of non-insured investments."
Aviva: "Aviva takes IFA service very seriously. If an IFA has a problem with Aviva wrap we would want to speak to them and resolve the issue as quickly as possible."
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