SimplyBiz: Less than 4% of IFAs will consider restricted channel
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Source: Huddersfield Daily Examiner
Less than 4 per cent of SimplyBiz and Compliance First advisers say they will consider the restricted advice route post-RDR, according to SimplyBiz chairman Ken Davy.
The support services firm surveyed 500 of its member IFAs and found that appetite for the restricted route dropped further still when advisers realised that the qualification and remuneration requirements are the same for independent and restricted advice.
Davy says he is not surprised by the findings.
He says: “One would not use a lawyer or accountant whose advice was restricted, so why on earth would you take your finances to someone whose advice was restricted to a limited range of solutions?
“Multi-ties were a failure in 2002 and under their new name of restricted advice, I believe they are even less likely to prosper in 2013. The absolute reality is that restricted advice is bad for the consumer and bad for professionalism. Invariably the end result is that manufacturers and distributors work together to create products that deliver less choice to the consumer at a higher cost. It is a road to nowhere for IFAs and their clients.”
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Readers' comments (18)
Mr Smug | 13 Sep 2010 9:46 am
How about Ken Davy for chairman of the new CPA?
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Anonymous | 13 Sep 2010 9:57 am
now that's an idea Mr Smug. Unfortunately Carlsberg don't do financial services
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Patrick Schan | 13 Sep 2010 10:19 am
"Unfortunately Carlsberg don't do financial services" Anonymous 9:57 am
At the moment!
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Steve Laird | 13 Sep 2010 10:53 am
This survey just shows how poor a grasp of the implications of the RDR that most IFAs have.
Less than 4%? I reckon at least a third.
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Anonymous | 13 Sep 2010 11:01 am
To compare 'restricted' advice with Multi-tie is, unfortunately, to show a rather restricted understanding of the RDR. Multi-ties were doomed to failure from the start because they were based on splitting commission - commission will not exist for most contacts post -RDR. Restricted advisers will not just be tied/bancassurers etc but will include those who want to carry on pretty much as they are, with an effective fee-offset model and advising on the contracts they know and understand. These are firms which do not want to bring unregulated collectives etc into their client discussions with consequent increases to PI and other knock-on effects.
The FSA should never have tried to cram so many different models into the definition of 'restricted', it will be an obstruction to th edevelopment of this channel
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John Blackmore | 13 Sep 2010 12:13 pm
agree with Steve Laird - this only shows how little Simply Biz members understand about what it will mean to be Independent post RDR.
The majority will eventually become restricted unless sense prevails and RDR is abandoned.
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Harry Katz | 13 Sep 2010 7:40 pm
Ken is right on the money on this one. Restricted is a blind alley suitable for the flogit and run brigade who are determined to hang on however they can.
You can use whatever semantics you like, but restricted is not independent. It is second best and I think it is rather illuminating that the life offices are pushing this as hard as they can. You can take that as you please.
The mooted divisions are absolutely ridiculous – Tied advice, simplified advice basic advice, restricted advice and Independent advice. The only true advice is independent – the rest is flogging.
Are you going (for example) to ignore Inheritance Tax ramifications when flogging a large investment? Or an annuity when flogging a pension? Advice is what is needed and that remains the province of independents.
As to the comments that some IFAs are displaying ignorance – well I’m afraid so are those commentators. The failing of the regulation is that although in theory you have to consider everything any normal client will loose the will to live if you actually listed what you are NOT recommending and why. And if you did do that you’d probably fall foul of TCF insofar as you would be accused of padding out the report in order to charge an outrageous fee.
Surveying the whole market is a concept that cannot be taken too literally and the Canaries will eventually recognise this. What they probably mean is – ‘Please don’t flog just insurance bonds and insured pensions’.
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Monsieur Reynard | 14 Sep 2010 7:44 am
"I'm a fully qualified financial adviser, offering a wide range of financial planning advice. I only deal with providers that I've assessed as financially stable, offering competitive products, a track record of delivering, and a strong customer focus. I'm not actually prevented from dealing with any provider, but I have a panel of those I'd prefer to deal with. If you have a need for a product that isn't available from one of these providers then I can still source it for you.
I can give you advice on your existing investments/policies/products. I'm not biased by commission, because product providers are not allowed to offer commission anymore, and I'm not allowed to accept it.
Despite the FSA requiring me to describe myself as offering "restricted advice", within the limitations I've described I'm still required to put your needs first"
So Mr Davy and Mr Katz, please tell me just what is wrong with the above proposition? And how does it differ from what the majority of IFAs currently do in practice?
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Phil Castle | 14 Sep 2010 8:55 am
Sorry, I have to disagree with Karry on this one and I think John Blackmore and Monsieur Reynard have read the RDR paper correctly. It looks likely many IFAs will have to consider describing themselves as restricted for the reasons John has explained and in the manner Mr Reynard has outlined.
I do hope however that Harry is right in his last parragraph "Surveying the whole market is a concept that cannot be taken too literally and the Canaries will eventually recognise this. What they probably mean is – ‘Please don’t flog just insurance bonds and insured pensions’." I will not hold my breath however that they WILL realise this as this will be one way they can get rid off the Independant nature of IFAs and could be their "final solution" to those pesky IFAs...
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Well 'Arry..... | 14 Sep 2010 8:57 am
To Harry Katz @ 13 Sep 2010 7:40 pm
You said "You can use whatever semantics you like, but restricted is not independent. It is second best and I think it is rather illuminating that the life offices are pushing this as hard as they can. You can take that as you please."
Question: really, which life offices are pushing restricted advice.. I know of none doing this, name names man........
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