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Advisers face McCarthy’s challenges

A group of leading financial advisers says it is wrong to suggest the advice sector is willing to tackle the problems identified in FSA chairman Callum McCarthy’s recent speech.

A Meeting of Minds, which comprises around 30 chief executives and managing directors of big adviser firms, says advisers have taken on board criticisms levelled by McCarthy regarding profitab- ility and churning.

The group says it is aware of the challenges. The results of its first questionnaire, which shows an average cost ratio of over 100 per cent for firms surveyed, highlights the scale of this challenge.

It devised this new annual distribution performance questionnaire after initial meetings of the group decided the need for better business modelling was a priority. It is encouraging all IFA firms to participate in future studies.

It found top performers earn over 85 per cent of revenues from existing clients , have a lower proportion of revenue from fees and use e-commerce more than four times as much as poorly performing firms.

A group statement says: “Sir Callum McCarthy was critical of the sector for failing to address profitability issues but it would be wrong to think that businesses are unaware of the challenges or unwilling to address them.”

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