Adviser > Your business > Dual AMC > Active Member Discounts – the myth of the free lunch
Active Member Discounts – the myth of the free lunch
We’ve seen an increase in interest for Active Member Discounts (AMDs), where the charge is increased, even tripled, for those who stop making contributions.
This charging shape may have been portrayed as an easy way of increasing commission and/or having a new selling point to employers – the “free lunch” that you’re so commonly told you can’t have.
AMD myths - busted?
Perhaps, you recognise some of these statements as reasons you were given for why AMDs are the future:
- Myth 1 - There’s no problem if you transfer out paid-up customers
- Myth 2 - This is the way forward for AMC-based commission
- Myth 3 - If the disclosure is inadequate, the provider bears the risk
- Myth 4 - The employee is not your client, the employer is
- Myth 5 - The contract is cheaper
- Myth 6 - The charges are clearly disclosed
- Myth 7 - Long-term members pay more
- Myth 8 - Short-term members pay more
Our summary
Scottish Life’s position on AMDs
So what’s the problem?
As a provider, we’ve been looking at the AMD shape ourselves and have come to our own conclusions on those supposed advantages. Our conclusion is that this lunch is not going to be free at all. We thought that since you may have had the spin of AMDs, but maybe not the potential pitfalls, we would share our thoughts on the above “benefits”. You can see why we’ve labelled these as myths by clicking on the statements on the right that interest you.
These are just our thoughts of course. That’s why we’ve added some questions you might like to ask AMD providers so that you can make your own mind up based on their answers.
So what’s our position?
With consultancy charging being introduced at the end of 2012, AMC-based commission has a very limited shelf-life. We’ve been banging the “Factory Gate Pricing” drum for some time so we won’t go into that again now.
Consultancy charging and Factory Gate Pricing are the future for adviser remuneration. We are here for the long-term and that’s why we’re looking to set up plans with you that can last the distance, not just until 2012. Just to make it clear...
We will not be offering AMC-based commission through AMDs.
Would you like to talk to us?
But we’re more than happy to talk further on our Financial Adviser's Fee or our position on AMDs.
If you do want further information:
- Read the summary of our position
- Please talk to your usual Scottish Life contact.
- Send us an email and we’ll be happy to get back to you.
For professional advisers only
