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Consumer confusion &#39shows need for IFAs&#39

IFAs say research proves the need for independent fin^_^_an^_^_cial advice

as the public floun^_ders under a bombardment of pro^_ducts and

information.

An FSA survey suggests that consumers have difficulties understanding

information and identifying products to meet their needs.

The research found that res^_pondents were aware of the need for financial

products – with one third saying a life event had prompted them to

consider buying a product – but they were confused by
the choice

available. However, they did not tend to shop around.

The pre^_ferred means of
seeking advice cited by 73 per cent of

respondents was face-to-face contact.

The study into consumer needs for financial information forms the first

in a series of consumer research papers commissioned by the FSA from BMRB

International.

The survey polled 1,081 adults throughout the UK who are responsible for

making financial decisions, broken down as 55 per cent men and 45 per cent

women.

It also targeted ethnic minorities and the disabled. The FSA says the

research highlights problems faced by some ethnic and disabled groups.

Language barriers were exp^_erienced particularly among the Bangladeshi

community. Deaf people preferred communicating by videophone using sign

language while the visually impaired preferred contact with a person.

Future research papers will focus on financial exclusion and consumer

testing of decision trees for stakeholder pensions.

Sofa press spokesman Robert Reid says: “Inform^_ation overload makes the

need for professional financial advice
all the more important as this

survey shows.”

Gerry Dupree IFA John Short says: “This is conclusive proof that there is

a definitive need for independent financial advice and also a clarification

on polarisation. People need to know who they are going to.”

FSA head of consumer policy and research Victoria Raffe says: “This

research should provide food for thought for other organisations involved

in the provision of financial advice and information.”

The Government&#39s new pension sharing rules are likely to spell a boom for

IFAs, according to pension experts.

They believe rules allowing pensions to be split on div^_orce will mean

that lawyers will need to forge new links with IFAs so they can properly

advise their clients.

Pension experts are urging IFAs to identify divorce solicitors and press

them for professional connections.

They say the majority of solicitors are not able to provide advice on

pensions and will therefore be struggling to explain to clients their

options in the event of divorce.

One of the tasks that IFAs will be able to perform under the new

regulations, which are to be implemented on Dec^_^_ember 1, is to calculate

the benefits of a spouse&#39s pension so it can be split fairly.

Another role IFAs can play is to assess the suitability of the

arr^_angement for the other spouse, which may involve judging whether an

occupational plan should be left with the employer or transferred to

another provider.

There is also scope for further advice such as for mortgages and

protection once the divorce process has finished.

Clerical Medical pensions strategy manager Nigel Stam^_mers says: “This is

a golden opportunity for IFAs to build new relationships with soli^_citors.

The advice needed could be quite complex and possibly involve transfer

ana^_lysis and many solicitors will be ill equipped to face that challenge

alone.”

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