Gaining wider acceptance of adviser charging is largest challenge for IFAs in 2014, according to Dunstan Thomas poll Defined Ambition receives thumbs down from pensions industry
8 January 2014
Gaining acceptance of adviser charging amongst a wider cross-section of customers is pensions-focused advisers’ largest challenge this year, according to nearly a third of respondents (28 per cent) to an online poll which retirement solutions provider Dunstan Thomas carried out in mid-December. Replacing disappearing trail commissions was their next largest IFA challenge, with 23 per cent citing this as the key issue for pensions-focused advisers this year.
More controversially, nearly two-thirds of respondents (64 per cent) think the Department of Work and Pensions (DWP) should be focused on boosting the appeal of Defined Contribution (DC) workplace schemes rather than promoting its Defined Ambition (DA) alternative.
Only the Retirement income insurance aspect of DA schemes received significant support, backed by a third of retirement market respondents (34 per cent). Just one in six (16.9%) retirement industry decision-makers favoured the Collective Defined Contribution proposal which would form a key element in DA schemes.
Over half (51 per cent) backed automatic transfer of sub-£10,000 pension pots to new employers; whilst the most popular change in the current Pensions Bill 2013 is the institution of the single-tier state pension, favoured by 55 per cent. The least popular change was ‘extending the government’s powers to restrict charges as well assetting administrative and governance requirements for workplace schemes’. Nearly half (45%) green-lit the prohibition of incentives for transferring pension scheme rights.
Greater focus on the burgeoning at-retirement market is seen as the key route to growth in 2014 for pensions advisers and providers alike, according to 42 per cent. A sixth of respondents (16 per cent) cited Guided Advice as the strongest growth opportunity in 2014, while no one saw D2C platforms as a source of growth this year.
The largest challenge for retirement product providers this year will be ‘operating within new charges cap for AE DC pension schemes’ and ‘simplifying annuity purchasing and reducing annuity charges in line with Financial Services Consumer Panel recommendations’. Each received 34 per cent of the vote.
Natanje Holt, managing director, Dunstan Thomas, commented on the findings: “Although there are some elements of DA which are being well received by the industry - the key problem with it is the timing when the workplace pension world is already going through the largest transition in a generation with Auto-Enrolment. This combined with significant numbers of employers still migrating from DB to DC schemes, leaves not enough time and resource to give DA the attention it probably deserves.”