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Autif says polar shifts will sink the discount brokers

Autif is predicting that discount brokers will be wiped out by changes to

polarisation because they will not be able to sustain their niche market


Chairing a polarisation debate at PIMS 2001 on the Oriana this week, Autif

said that depolarising the market would almost certainly spell the end for

discount brokers as they would lose their competitive edge.

The trade body believes that if changes to polarisation mean product

providers are able to sell products without an inclusive charge for

commission direct to consumers, discount brokers would be squeezed out of

the market.

But many in the industry disagree with the Autif argument, saying there

will always be margins for discount brokers to cut. They claim that

polarisation itself is not an issue but highlight the main threat to

brokers as being a wholesale move to fee-based advice in the IFA sector.

HCF Partnership partner Richard Craven says: “It is interesting to hear

the industry trade body predicting the destruction of the only part of the

industry that saves investors money. Discount brokers have more

infrastructure in place than others and we will see it prosper.”

Govett Investments director of sales and marketing Graeme Sinclair says:

“Polarisation is not going to make a difference. But more competition

increasing pressure on the front-end charges means the discounts they can

offer will not look as good.

“But as long as products are being sold, providers have to remunerate the

sellers and that means there are margins that discount brokers can cut. The

one thing that will affect discounts is a move to fees.”

Autif communications director Anne McMeehan says: “Discount brokers,

without a doubt, will be wiped out or will have to find another niche

position if their unique selling proposition is knocked on the head.”


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