View more on these topics

‘Free’ advice that will cost consumers dear

Changes made by the Government to the financial services industry have patently failed to address the problem of the millions of people in the UK who have traditionally failed to take responsibility for their long-term financial welfare.

However, those financially savvy individuals who rec-ognise the value of paid-for independent advice over the sale of advice-free but high-commission products will undoubtedly draw significant benefits from the new approach adopted by many IFAs.p/>Yet even the wealthy resent paying for financial advice, however transparent the charges associated with that advice might be. For many, an annual fee of, say, 1,500 to monitor an investment portfolio, savings plans and pensions or more than 500,000 would seem good value, particularly when it removes the burden on the adviser to sell products to achieve a profitable business.

But the financial services industry has got a lot of work to do. It will take the industry many years to win back the confidence of customers cynical about independence and the value or quality of advice. During this time, the number of IFAs will probably fall to less than 50 per cent of today’s number.

Increasingly, regulatory and compliance issues will mean that many IFAs will, over time, turn instead to tied or multi-tied status to service that large proportion of the public that will remain averse to paying for advice, preferring the free approach of the tied and multi-agents and commission to pay for the service.

With no real service or client relationship, most of the public will continue to wander from adviser to adviser and back again in search of a solution, ending up with only a diverse range of products based more upon the sales focus of the day than their specific needs.

Mike Nevill
Managing director,

Vantis Financial Management,

Middlesbrough

Recommended

Britannic selects JPMF Mercantile for roll-over

JPMorgan Fleming Mercantile Investment Trust has been selected by Britannic Smaller Companies Trust as the sole roll-over option for Britannics reconstruction. JPMF Mercantile has developed an innovative reconstruction scheme to complete the transaction, which allows it to buy and hold shares in treasury before reissuing to Britannic shareholders. This is the first investment trust reconstruction […]

Broker talkback

Do you think responsibility for risk ratings should lie with IFAs rather than with providers?

Budget date announced

The Treasury has announced that Gordon Brown will deliver his Budget on March 16. It is likely to be the last Budget before the General Election.

Our demutual friend

Standard Life chief executive Sandy Crombie sets out the reasons why demutualisation is the best course for the company and how it is setting its sights on two goals this year – maxim-ising the value of the company and crystallising that value to deliver it to members.

Tax allowances and exemptions

Helen O’Hagan, Technical Manager at Prudential, looks into the planning strategies that can deliver considerable tax savings for your clients. Inheritance tax (IHT) Consider Margaret, featured on our Planning Matters family hub, who is a sprightly eighty year old with four children and several grandchildren. She’s recently been widowed and IHT planning is high on […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment