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Advisers in fight for survival

Why are we all so quick to criticise what others are saying or doing? I am convinced that all the negative comments about other people&#39s perspectives are divisive and make us look like a laughing stock to the FSA and the Government.

What has happened to us working together and putting forward logical, rational and intelligent solutions that will help advisers and consumers alike?

There are now 77,000 registered individuals compared with 300,000 in 1986. That is only 26 per cent left, rounded up in case I am accused of being inaccurate.

With this number, we cannot possibly deliver advice to all those that need it for a variety of reasons, not least of all the cost of delivery and logistics.

Is it any wonder that wholesale changes will be made in an attempt to reduce the savings gap and that accessibility is the focus?

It was interesting meeting Ron Sandler recently and to hear his perspective on issues at first-hand.

He is convinced that we have confused consumers, that there is too much product innovation and that consumers are often charged too much for products. Furthermore, that our marketplace is too fragmented, with too many small providers relying on small distributors who sell these higher-cost products.

His stakeholder products, which will be promoted by the Government, will be bought through traditional distribution channels initially but eventually through supermarkets and post offices.

Just think, with 24-hour shopping, you could buy a stakeholder savings policy at 3am along with your pint of milk and newspaper after a night on the town.

My interpretation of this is that Sandler wants considerably fewer IFAs (I would say 90 per cent less) and only a handful of insurance companies offering unimaginative products. So, at a lower level, advisers will not be needed because, of course, consumers always recognise their own needs and are happy just to buy products. Will his dream become reality? Let us look at the current position for many IFAs (disclaimer time in case I depress anyone).

Reducing margins, increasing overheads (PI cover spiralling, regulatory fees not payable monthly, etc) stockmarket reductions and general loss of consumer confidence. Does any of this sound familiar? So, for many IFAs, it is already a fight for survival without further change to our remuneration methodology.

Insurance companies might have bigger pockets but the knock-on effects are inevitable and in particular the effect that stakeholder products and RU46 is having on pricing and margins. We already see as much work as possible passed back to the IFA, with less availability of resource and support from the product providers.

Why do we have to change the current system of remuneration? Why can&#39t we continue to offer the consumer the choice (as many of us currently do) of fee or commission without having to change our status? Is a wholesale product loaded by an agreed fee so necessary?

If it could be proven by widespread research among existing IFA clients that they would prefer to change to a new method, then I could understand it. My clients, many of whom I have looked after for some time, know exactly what we get when advice is implemented and/or where a product is purchased.

I am also very concerned about the continued servicing of existing clients. A major change in remuneration will mean that many will not be looked after because the adviser will not be able to afford to do so.

The number of advisers falling to 77,000 means that many former advisers&#39 clients are already not being looked after. How is it beneficial to take away even more access-ibility to advice?


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