If you listen very closely you can hear the faint gnashing of teeth in various large office buildings round the country.
It’s said sometimes that providers are now run by accountants, not actuaries. But actuaries, like certain water-borne infections, are hard to kill and they’re hard wired into the DNA of these large companies.
Why does this matter?
Simply put, it stifles innovation. The guy with the smart idea needs to prove that it not only makes money (and that ain’t easy by the time you’ve negotiated EEV/IFRS and all the rest) but that it makes as much money as old-fashioned insured business.
Never mind that the insured business is drying up as advisers and (increasingly) clients realise the value of investing in the underlying instrument.
The truth is that too often, product offerings are designed to try and replicate as much as possible the margins that used to be available.
Hence labyrinthine platform / SIPP charging structures. Hence minimum insured fund amounts. Hence an entire secondary industry devoted to trying to help IFAs understand what is going on. And saints defend the customers, because no-one else is.
One or two newer providers have had a stab and got close, but there is still room out there for someone to build a new model proposition that is genuinely, genuinely simple to understand. It might make a bit less per £ of FUA, but that might end up being a bit less of a whole lot more.
And the actuaries can perk up and start designing innovative risk pooling insurance products, which is what we need them to do.
