I agree with Brett Davidson of FP Advance that IFAs at the product-flogging end of the market who are unwilling to move to a fee basis will, sooner or later, be forced out of their present positions.
As in so many other walks of life, the climate in financial services is changing and in certain key areas for the better despite the FSA’s endless succession of cack-handed initiatives. Those who cannot evolve and adapt will either starve or have to find another line of work.
However, the prospect of such people finding a haven with the banks is very much less likely, not least because the FSA seems at long last to be focusing attention on the way in which bank advisers charge for their services. Personally, I think all this talk about the banks moving away from commission is little more than hot air to give a passing semblance of levelling the playing field.
Barclays may well be crowing about how big a slice of the IFA market they aim to grab but the crux of the issue is that most of the banks seem only to be capable of giving advice (flog-ging products) on the basis of maximum commission.
Bank salespeople will find that arranging a £100,000 investment bond and billing the client for three or maybe four hours work at, say, £150 an hour is a radically different proposition from taking their usual 7 per cent commission. It simply will not happen.
And as for long-term servicing, monitoring and reviewing of their clients’ affairs, the banks must surely have a very steep mountain to climb that will eat further into their profit margins.