Informed Choice managing director Nick Bamford is confident the IFA market will survive the impact of the FSA’s retail distribution review but warns that change will be rapid.
Bamford told advisers at Money Marketing Live in London last week that while he accepts some change is necessary, commission is not the problem. However, the impending move away from commission will force IFAs to sink or swim.
Bamford said: “Most of the changes in the retail distribution review will happen rapidly over a short period of time. As long as you are delivering what the client wants, it does not matter if the model is broken or not because it is being fixed. It matters not if commission is good, bad or indifferent – the regulator thinks that the review will fix the broken model.”
Worldwide Financial Planning managing director Peter McGahan said he agreed with comments by FSA chairman Sir Callum McCarthy that the distribution model is broken but said advisers can survive if they are smart enough.
However, he warned that a decisive to move towards fees could be a huge risk because clients might not be ready for it, leading to the collapse of some IFAs.
McGahan said: “Commission is most definitely a motivator. The industry currently seems to be pushing a river up a hill. The future is about treating customers fairly, which I see as the biggest driver in the market. There is so much pressure on selling the product, advisers are not allowing themselves to give the best possible advice.”