Advisers think the regulations around Lifetime Isas need to be relaxed to allow for adviser charging for the product to be a success, research suggests.
An AJ Bell adviser survey January found that many respondents thought that less than 10 per cent of their clients would find a Lifetime Isa attractive.
But in a follow-up study this month, nearly half of respondents said allowing adviser charges through the Lifetime Isa would increase uptake of the product.
AJ Bell says Lifetime Isa portfolio values would have to be built up over a number of years before adviser charging becomes feasible.
If clients wanted to pay advisers through their Lifetime Isas, this would currently be classed as a chargeable withdrawal, though the 25 per cent exit penalty would not apply to charges taken to pay a Lifetime Isa manager.
AJ Bell head of platform technical Mike Morrison says: “It makes no sense for adviser charging to be prohibited for Lifetime Isas when it is allowed for Isas and pensions.
“We know the Treasury wants the Lifetime Isa to be a success, so it is strange it is not prepared to make a simple change that could help that. The Government should be encouraging people to take advice about their savings, not putting barriers in the way.”
He adds: “We risk ending up in a situation where clients have £50,000 or £100,000 invested in a Lifetime Isa but are not able to pay for advice via that product. Worse still we may have people who miss out on the opportunity to build such a pot because of this barrier to advice.”
Last year Labour MPs tried and failed to make advice on the Lifetime Isa compulsory because of the complexity of the product.
The Lifetime Isa will be available from next month but those offering the product must include certain risk warnings.