The launch of the Lifetime Isa next week should prompt banks to offer stocks and shares Isas alongside existing cash-only Isas, consultancy Hymans Robertson has said.
The Lifetime Isa, or Lisa, allows people under 40 to start saving up to £4,000 a year, plus 25 per cent government bonus, towards either a first home or their retirement.
The legislation allowing firms to provide the product will go live next Thursday (6 April).
While a growing number of investment companies announced plans to launch a Lisa, as yet very few banks or building societies have followed suit.
Only Skipton Building Society has said it will definitely launch its version of the new savings wrapper. However, it will only offer a cash product.
Karen Brolly, head of products, life and financial services at Hymans Robertson, said the likelihood was that any banks that followed Skiptons would initially stick to cash-only Lisas.
But she said this need not be the case.
“If I was a provider, I’d think this was the ideal time to start getting into both," she said.
"The longer-term investments [in a Lisa] should be going into investments other than cash. But people are quite nervous about it."
In particular, she said banks and building societies were wary of the advice side of selling investment products.
Bank branch staff, she said, could “freely talk to” customers about a cash Isa, but "most of them won’t be fully registered to actually give advice".
"So they can only say, ‘Well, I can give you this piece of information about stocks and shares, but I can’t talk to you about it.’ It would have to be really bland," she said.
Most banks would have to get “different permissions” if they wanted to branch out into to stocks and shares Lisas, she said.
This, she said, was "not impossible to do", pointing out that a few banks – such as Virgin Money – did have such licences.
“So there’s nothing to stop them. But you usually have to find a way to facilitate it,” she said. This would include banks developing their own fund ranges and platforms.
Ms Brolly predicted that so-called "challenger banks" would be quicker to exploit the opportunity than the established names.
The architect of the Lisa, Michael Johnson, has pitched it as an accessible product that would get millennials engaged in saving for a pension.
Mr Johnson, who is a research fellow at free market think tank the Centre for Policy Studies, recently told FTAdviser that the challenge was not to create the product, but to distribute it. He said he would like to see tech and internet firms like Apple, Facebook and Google offering Isas.
Jon Greer, pensions expert at Old Mutual Wealth, said he was "not sure that banks are that interested in this product".
"The majority of people who are going to be taking this out will have a short-term saving profile," he said.
He predicted that banks would take a "watching brief" on the Lisa to see what demands is like, as Old Mutual Wealth itself is doing.
He predicted that the product would be popular for first-time buyers, but not as a pension substitute.
james.fernyhough@ft.com
