The logic is that IFA numbers are going to fall significantly and they can fill the gap left behind. There are an awful lot of IFAs looking for new business so a few less would be no bad thing. In the 1980s and 1990s, the old order insurance companies recruited self-employed tied salespeople. These salespeople spent two or three years learning their “craft” before moving on to become IFAs. These salespeople, now IFAs, continued to hold a general affinity with their previous “employer” so continued to recommend their expensive and commission-loaded products.
The problem is that most IFAs are no longer using insurance companies for anything other than protection business and the occasional bit of with-profits. Therefore, when the tied salesforce of these dinosaurs (sorry, insurance companies) start trying to sell sub-standard investment and expensive pension products to the public, they are going to be laughed out of the meeting and the newly level-4-qualified salesperson is going to either head for the hills (unlikely) or join one of the growing band of professional IFA companies.
Both the “newbie” and the IFA will avoid using the said insurance company wherever possible. The other more useful side effect is that the fortunes the insurance companies will spend on advertising will raise the profile for the need for financial planning and will benefit IFAs.
There is little point in IFAs trying to point this out to insurers as they are conv-inced they are right. Is there an option? Yes but we are too late for that. So while IFAs look to alternatives to using insurance companies, the dinosaurs rush off the edge of the cliff.
Tony Slimmings Ltd