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Fidelity fires back at Sandler commission claim

Fidelity has taken issue with Ron Sandler&#39s claim at the recent Aifa dinner that IFA clients are only satisfied with advice because they think it is free.

The company says it is hard to believe that customers can have this misconception, given the levels of disclosure by advisers.

It also points to evidence of higher satisfaction among IFA clients than direct investors and a growing number of consumers in the US buying funds through advisers despite higher initial and annual charges.

Fidelity&#39s analysis found average monthly returns have been better for advised investors than direct investors over the past 10 years. It found an IFA client investing £1,000 in the UK All Companies sector in July 1991 would make £3,518 by June 2001 on an annualised rate of 13.4 per cent, while a “DIY investor” would end up with £1,885 on a rate of 6.5 per cent.

Its research shows 50 per cent of IFA clients are satisfied with their investments compared with 34 per cent of non-advised.

In the US, it says the percentage of households buying funds through an adviser was up to 84 per cent in 2000 from 50 per cent in 1998.

Fidelity Investments head of IFA business Stuart Holah says: “We disagree that people value things more when they are free. Generally, people attach most value to commodities or services that they have paid for.”

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