With the LISA's 6 April launch date now past, it is decision time for savers and advisers but, wonders Martin Jones, just where will the product sit in their list of priorities?
A few months back, I bought an Amazon Echo. This is a small, black disc, not unlike an ice hockey puck, through which you can access the US retail giant's voice-activated, cloud-based information service.
To activate it, you use the wake-word ‘Alexa', and it talks back to you in a not unpleasant robotic female voice. I can listen to music, order a pizza, phone a taxi, check the weather and set alarms - all with just my voice. Notwithstanding the occasional confusion around "snooze" and "news", it is a lot of fun.
Even so, I often find myself wondering what the point is. I could do all those things pretty easily anyway. Has it made my life materially better? Do I really need it?
All of which is reminiscent of the Lifetime ISA (LISA). You can invest tax-free, save for a house deposit or use it for retirement - all with the benefit of a government bonus. Yes, there are a couple of glitches to be wary of - for example, exit penalties - but it sounds great, right?
With the 6 April launch date behind us, it is now decision time for savers and advisers. So, dubious opening tangent completed, just where will the LISA sit in savers' and advisers' list of priorities?
* Yet another ISA? We now have a growing array of ISA propositions. Stocks & shares ISAs and cash ISAs have been around for a couple of decades and have been an unequivocal success. In the last few years, we have also seen the introduction of the somewhat vaguely-titled Innovative Finance ISA, the Help-to-Buy ISA and now the LISA.
And that is before we even get on to what you actually invest in. Will savers appreciate the options on offer, or will they be paralysed by this ‘tyranny of choice' and end up doing nothing?
* Will savers even be able to open one? The big beasts of the banking and insurance world are yet to play their cards. Is this in itself indicative of an ambivalence towards LISA? Either way, the resulting lack of marketing dollars will hardly help take-up, and a lukewarm reaction in the short term could work against it in the long run.
* Will it still be around in five years' time? For an indication, let's look at the Help-to-Buy ISA, which was introduced on 1 December 2015. With the LISA now catering for the first-time buyer market, however, it was subsequently announced savers would not be able to open a new Help-to-Buy ISA after 30 November 2019 (although they can be used by savers until 1 December 2030).
In other words, is there a risk the LISA will be just another Help-to-Buy ISA? There is no doubt both are valid savings products but, from a savers' or advisers' perspective, will anyone want to put funds into a vehicle when they are not sure it is going to exist in the same guise in five years' time, let alone 10, 20 or 30?
* Would savers be better off sticking with a pension? It may not be new or sexy, but a pension is still a hugely tax-efficient way of saving. Automatic enrolment is starting to build up a head of steam. Will LISA derail pensions if savers eschew the latter for the former?
Many savers might prefer to stick with what they know - particularly as they may already have built up funds in a pension and may be unwilling to start a new pot elsewhere. Then again, this could be the product that really energises savings in the target Millennial audience.
* Can savers pay an adviser from a LISA? One issue for many will be adviser charging. Of course, if a LISA is the right product for a client, an adviser will still recommend it, but the fact the LISA does not facilitate adviser charging is another concern that might chip away at overall confidence in the product.
Returning to the gadget theme, you could easily make a case that tablets are pointless. These have, however, proved a massive success with consumers and I certainly would not be without mine. Then again, I also bought a Minidisc player, and I liked that for a while …
One thing for certain with the Amazon Echo is that it is a talking point - pun intended - and the same can be said of the LISA. Will it go the way of the tablet or will it be another Minidisc? It is too hard to call right now.
More worryingly, what will my neighbours think when I'm shouting out different women's names at all hours?
Martin Jones is technical resources consultant at AJ Bell
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