Consultancy charging need not choke off group pensions – Scottish Life

Scottish Life has rejected suggestions that an RDR-enforced move to consultancy charging that is akin to its own financial adviser’s fee model will choke off group pension distribution.

Scottish Life says its remuneration approach can be successful, as demonstrated by the fact it has set up over a thousand small to medium sized schemes using its financial adviser’s fee model.

Aviva says while ScotLife’s financial adviser’s fee model can work well for smaller businesses, where it is possible to have face-to-face advice with staff, the approach is far more problematic to implement for larger schemes, where one-to-one communication is not logistically possible. For this reason, Aviva argues that the number of group pensions advisers active in the UK will fall if the RDR proposals on workplace contract-based schemes are implemented as currently drafted.

But ScotLife says communicating consultancy charging to large numbers of staff should not be an insurmountable problem for intermediaries.

Alasdair Buchanan, head of group communications at Scottish Life says: “Two thirds of new group schemes are currently being written on this basis.  So it does work in practice.
“Scottish Life is very happy to share our practical experience with advisers, to help them adapt their current business model to ensure their success in an RDR environment.  Quite apart from anything else, it must surely make sense for advisers to be in control of the remuneration arrangements they make with their clients, rather than having to accept whatever a provider sees fit to pay to them.

Paul Goodwin, head of pensions at Aviva says: “Yes, financial adviser fee can work well for smaller schemes, but it isn’t going to work for larger schemes that work on a commission basis.”