Some unbundling is more equal than others

Mark Polson’s article on re-registration grabbed my attention. He has an uncanny knack of cutting through the fluff and getting to the detail. But the Polson express flashed past an important stop on the way to destination platform utopia – pension transfers.

Mark rightly points out that, although varying significantly platform to platform, much of the funds that sit on platforms reside in pension wrappers. Some still even call themselves SIPPs but whatever the name they’re still a pension, and switching a pension from one provider to another still requires advice. And advice requires the client to pay.

So there’s an inconvenient stop on the journey to seamless registration, one that all the swift transfer of funds and assets cannot get around: the ‘inconvenience’ of making a recommendation to a client and gaining their agreement.

Advisers who buy into a platform ecosystem probably never think they’ll need to move a client to another platform. Feedback also suggests they rarely do so in order to access pension expertise, seeing the bundled wrapper as sufficient. However, the cost of then having to move that wrapper in the future may well end up costing the client more – both that cost and that cost to the adviser’s time are incalculable.

The past of financial services is littered with bundled products that failed to varying degrees to meet client needs. Bundled insurance with mortgages, payment protection insurance with loans, the list is endless. I’m not saying the bundling a platform and pension together will end the same – let’s hope not. But in the brave new world of unbundling and clean pricing investments it seems rather ironic that the consequences of bundling a pension wrapper or SIPP have been overlooked.