View more on these topics

Huge cost of lower-tier advice

Lower-tier advisers would have to reach “super-human” levels of productivity, achieving £480,000 in annual sales for the first three years just to break even, according to global consultancy AT Kearney.

Writing in this week&#39s Money Marketing, AT Kearney principal Gerard Sharkey says it would be nearly impossible for the FSA&#39s proposals to be commercially viable because of the low commission available on the type of products such an adviser would be allowed to sell.

He says the bag of “safe” products would include stakeholder and Catmarked Isas, both of which have a price cap of 1 per cent, limiting potential revenue, plus term cover and traditional annuities.

Other than generating £480,000 in annual turnover, he believes that the only other option would be to charge a case fee of £110 per client, which would go against the very nature of the proposal.

Until the FSA presents more details of its proposals, neither IFAs nor direct salesforces would be interested in taking part in the scheme, says the consultancy.

Sharkey says: “What really needs to happen is the FSA has to engage with the industry to convince providers to look to the internet to launch propositions as it is the only way that it is going to work.”

Sofa chairman John Porteous says: “I cannot see £480,000 of revenue coming from that end of the market. Just think about the sheer logistics of seeing that many people. You would end up selling products rather than giving advice at the lower end of the market despite the fact that these people are in the most need of advice.”

FSA spokeswoman Jackie Blyth says: The proposals in CP121 are green proposals and we have not fleshed them out in any way yet.”

•CA lower-tier plan, p3, Comment, p33

Recommended

Manchester Building Society – Bronze Bond

Monday, May 27, 2002 Type: High interest account Minimum-maximum investment: £2,500-£150,000 Interest rate: 5.05% gross a year Term: Until June 30, 2003 Offer period: Until further notice Withdrawal penalties: 90 days&#39 loss of interest on amount withdrawn Tel: 08709 900810

Equitable Life accuses IFAs of urging policyholders to quit

Equitable Life has attacked IFAs and the media for adding to its woes by encouraging policyholders to leave the troubled life office in droves.Speaking at Equitable&#39s annual general meeting in London this week, chief finance and investment officer Charles Bellringer said the interests of financial advisers do not tally with those of the society. He […]

As and means

Mr and Mrs A have recently sold their business and are retiring at age 65 and 63 respectively. They have a total of £180,000 in cash and do not wish to take much risk. Mr A has two paid-up personal pensions with Lincoln and Scottish Widows, both offering guaranteed annuity rates although the Scottish Widows […]

Swedish bank may be targeting UK building society

Swedish bank Svenska Handelsbanken may be looking to expand its UK presence by targeting a building society with a takeover bid according to a story in a national newspaper.The bank, which is one of Scandinavia&#39s largest, has made recent statements saying it views the UK market as that with the most potential outside of the […]

Help, I’ve been appointed as a trustee. What are my responsibilities?

Graeme Robb, Technical Manager at Prudential looks at the key duties and responsibilities of a trustee.  This article will consider the following: Duties to be performed on appointment Investment duties Protecting the interests of beneficiaries Keeping accounts and records Distributing property to beneficiaries Duties to be performed on appointment Obtain a copy of the trust […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com