Aifa says care needed on execution-only
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Aifa has warned that adviser firms looking to set up an execution-only operation should be careful that there is a clear separation between this and their advice service.
In a paper today, Advice Horizons, Aifa says that firms may look to set up execution-only services for some clients which could continue to generate commission as they would not fall under the retail distribution review’s adviser charging rules.
Aifa says: “Firms could consider setting up an execution-only facility for potential and existing clients to purchase products through them without advice.
“This could generate revenue, including upfront commission as execution-only is outside of the RDR’s adviser charging requirements.”
The trade body says this could be useful for clients who are confident in their decision making but might want to seek advice from the firm in some circumstances.
But Aifa adds: “Firms should be aware that the FSA have said they take a very dim view of any firm providing advice and recommendations that are then transacted on an execution-only basis through a firm associated with that which gave the advice.
“There must be a clear separation between advice and execution-only services.”
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