The investment industry must back the current polarisation regime or risk the market becoming dominated by the biggest providers with the biggest marketing budgets, Investec has warned.
Speaking at last week's Sway Senate Programme conference in Madrid, Investec managing director Jamie MacLeod said the fund management industry must support IFAs.
MacLeod said the investment market is becoming increasingly reliant on the IFA sector which has a 60 per cent share of the retail fund sales. He believes discarding the current polarisation rules in favour of multi-ties would only benefit the bigger players to the detriment of many smaller aspiring investment houses.
The warning comes as AITC director general Daniel Godfrey, speaking at the same event, raised fears that product multi-ties would lead to higher charging products and poorer quality advice.
Godfrey said that instead of changing the rules, the Government, FSA and industry should promote independent advice and set in place measures to build public confidence and standards in the industry.
MacLeod says: “The industry must support the debate that it is good for private investors to receive indep endent advice. Imagine multi-ties. What investors would get is the product that would have used its marketing muscle rather than its product integrity.”
Godfrey says: “I recognise the system does not work perfectly as it stands. The answer is not to abolish polarisation but to raise standards and promote independent advice.
“The industry has focused too much on competition for distributors rather than meeting clients' needs. They should channel resources into providing what has the best results for clients rather than distributors.”
Sway Conference, p8