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Abbey stressing wrap importance for fee structure

Abbey for Intermediaries claims that IFAs will not be able to give whole-of-market investment advice with fees without a wrap product.

The firm says advisers are concerned that they could be set an almost impossible challenge in offering a fee structure after depolarisation.

It says that altering business models could prove difficult for many companies and that trying to implement a fee-based structure for more than a handful of firms would be costly and time-consuming.

When depolarisation begins, financial advisers who want to remain independent will have to offer clients the choice of fees or commission when they buy a product.

Abbey for Intermed-iaries head of wrap propositions Holly Mackay believes that only a wrap can offer the solution. The firm held a range of depolarisation workshops and claims that initially advisers had said they wanted to remain independent but, as the implications of what that would mean have become clearer, more have said they would consider becoming multi-tied.

Mackay says: “What we have seen is that there is a difficult decision to be made by advisers about developing a fee model. You simply cannot change a business model that easily and switch over.What is needed is for products to be kept inside a wrap. Without this, a fee structure would be almost impossible. It is not that it poses a challenge to becoming a multi-tie, it is simply another option.”


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Single minded

Depolarisation has been a long time coming. Almost since the Financial Services Act depolarised financial advisers into the independent and tied camps, calls were made for a more flexible reg-ime. But it was not until the Office of Fair Trading published its paper in August 1999 that depolarisation gained a head of steam.


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