65% of investors want adviser charging, says NMG
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Sixty-five per cent of investors with a financial adviser agree that the move from commission to adviser charging is a positive step, according to research by NMG.
The survey of 324 investors during May and June 2010 shows that 69 per cent believe adviser charging will improve their understanding of the cost of advice.
In addition, 85 per cent agree with the requirement for the higher levels of qualifications.
But NMG says adviser charging is likely to affect how investors behave. Sixty-seven per cent saying they believe it will prompt them to shop around and 37 per cent say they may choose to purchase their investments without taking advice.
NMG director Jonathan Gunby says: “Our investor research is broadly encouraging, with good levels of support from clients for the adviser charge and overall we don’t expect many investors will be driven to change their current arrangements.
“However, there are clearly some concerns and advisers must not take their existing relationships for granted. The industry needs to better understand and prepare for the segment of clients that think they can go it alone rather than pay a charge for advice.”
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Readers' comments (7)
Anonymous | 19 Jul 2010 12:08 pm
I bet a statistician would find this survey full of holes. What average size of investment did the participants hold and what were their socio-economic groupings?
Adviser charging is likely to be a disaster for mid and lower range investors for whom commission, given no bias, has worked fairly well.
Bald statements as in this article are almost meaningless.
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Rocket Scientist | 19 Jul 2010 1:18 pm
I agree entirely with Anonymous (12.08).
Reports like this are not helpful and do not help to educate the debate. The reality is a move away from commission will disadvantage a huge number of people in middle England.
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Anonymous | 19 Jul 2010 2:23 pm
The other question is how the questions were worded. 85% agree with the higher qualification requirements? I'm surprised that they found 15% who when asked "Do you think that advisers should be qualified" said "No".
If the surveyor laid out exactly what the RDR qualifications require (and what they don't - experience, ethics, analytical ability, etc) and then asked "Do you think your adviser should be struck off if he hasn't passed this test", I think you would get a very different answer.
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Nick Bamford | 19 Jul 2010 4:53 pm
Nicole
Is it possible to publish the questions that were asked and the demographics of the group of respondents?
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Frank Dennis | 21 Jul 2010 10:21 am
“Our investor research is broadly encouraging"
I thought surveys were supposed to be unbiased. It makes you wonder how the questions were loaded or whose "encouragement" was being sought.
How about we all as IFAS coduct a referendum amongst our Clients ? In the interests of proper consultation FSA should also hold a referendum amongst IFAS.
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Anonymous | 21 Sep 2010 9:22 am
So 223 people approve of adviser charging.There are probably a few million more who do not. Research such as this is totally ms leading and should be ignored
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David Burns, Executive Director, NMG | 21 Sep 2010 12:34 pm
I've been reading the reaction to our recent research with interest. I have seen similar 'concerns' expressed about other research we've undertaken so I thought I might respond on this occasion.
While the observation made along the lines that you can 'fix the result depending on how you ask the question' is undoubtedly true, NMG has no axe to grind in favour or against Adviser Charging. I can assure you that had the results of our survey been hugely negative to Adviser Charging we'd have been equally happy to report this.
On some of the specific points raised:
The sample is intended to be investors (as opposed to all consumers) as is stated in the headline to the findings. So we fully accept that they may not be representative of every person who an IFA sees. However, we know that the majority of IFA clients have £50,000 - £250,000 in investable assets (once you include pension assets) and this broadly correlates with the investors we interviewed.
On qualifications, we started by asking what level of qualifications investors thought advisers had to have at present. Over half thought that the existing qualification requirement to be an adviser was already equivalent to QCF Level 4 so it's not surprising that when they found out it was Level 3 they thought it should be higher. We did not 'lead the witness' on this!
A high level of investors had a very good understanding of what they were paying. They understood both the amount and that ultimately the cost of the advice falls on them. So when the operation of Adviser Charging was explained (as it was) we don't find it surprising that many are positive about the clarity this beings. After all, Adviser Charging does not require anyone to write a cheque, the amount can in most cases be deducted from any investment either via the product or via a platform. Some advisers are moving to a true fee model where the charge separately for the financial planning component and for implementation of the recommendation but they are currently a small though growing minority.
Finally, those of you who have seen any of NMG's work on the RDR will know that we have consistently been positive about the future for IFAs. The channel has been remarkably resistant over many changes and we do not take the view that the RDR will lead to the end of the IFA. Our projections (we all have them!) about the decline in IFA numbers have been towards the more conservative end.
We are completely independent so once again these views are 'agnostic' we have no axe to grind in favour or against IFAs. However, we base our views on hard evidence, having asked over 1,500 individual IFAs in the past year about their intentions regarding the RDR. This is c10% of IFAs who focus on investments which by any standards is a statistically robust sample.
We are always happy to clear up any misunderstandings about our research though we are only able to respond to specific comments where the author is attributed rather than preferring to remain anonymous.
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