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IFAs beat direct sales on cheaper distribution

IFAs are a cheaper distribution channel than their direct-selling rivals

when it comes to nearly two-thirds of unit-linked and with-profits

products, according to the latest FSA disclosure survey.

The survey, from December 2001, looks at 24 products comparing the total

remuneration advisers received over five years. It shows that in 15 out of

24 products, IFAs accepted a total remuneration of up to 62 per cent lower

than company representatives.

The FSA refuses to draw conclusions from the survey, saying the results are

not overwhelming, but providers are urging the regulator to take the

findings into consideration when designing the postpolarisation regime.

But the FSA says the survey only looks at monetary remuneration received by

advisers which means other incentives common among tied agents such as

company cars make them even more expensive.

Johnston Financial Services managing director Adrian Johnston says: “It

does not surprise me. I would imagine IFAs would be on average cheaper than

tied agents. It shows how expensive it is for providers to acquire business

through the tied channel.”

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