Tenet has branded adviser-charging a risky experiment which could do great damage to the IFA sector.
At an Aviva round table on the value of IFAs in London last week, Tenet executive director Geoffrey Clarkson argued that the transition to adviser-charging may not be the right move for consumers.
Clarkson said: “The problem with the RDR is making the transition from one remuneration structure to another. Who is to say that the remuneration structure we are moving to is the right one? There is a lack of willingness among consumers to pay for advice but the regulator seems to be prepared to take that risk.
“There is an experiment being undertaken with our businesses by a body that does not have much interest in the outcome in many respects as if the experiment does not work it will have gone by then.”
Clarkson questioned whether it is the right time to be imposing a new remuneration structure for advisers as the regular-premium savings market, which gave firms a certainty of income, has largely disappeared.
He added that IFAs moving to adviser-charging should be careful not to engage in price wars with other companies in the bid to win business, as has been the case in other sectors. He says: “Solicitors have made mistakes by commoditising parts of their services. They took the professional service of conveyancing and made it about how cheaply the service can be offered. We have to be very careful we do not compete on price to avoid the advice market becoming price-driven. As an industry, we have got to stick together on that and ensure we do not undercut each other for competitive gain.”