IFAs must become asset managers drawing performance-related pay if they are to survive in a rapidly changing marketplace, according to a report by PricewaterhouseCoopers..
This giant accountant and consultancy's draws the conclusion in its Investment Management Survey which examines the state of the investment management industry in the UK and Ireland.
The report says to remain competitive IFAs will have to increasingly target high net worth clients as supermarkets and new entrants sweep up the bottom end of the market.
And it says this will result in IFAs increasingly having to advise clients on asset allocation, effectively become "quasi-investment managers".
They will need to demonstrate to clients that they can find fund managers who outperform the benchmark.
The report says this will mean IFAs must move to fee-based advice, and suggests payments in future could be performance-related by taking annually a percentage of assets under management.
Financial services consultancy The Silent Partner managing partner Derek Stewart says: "IFAs invest money for people. They will have to justify what they do for what they earn. That will involve how they are paid.
"It is moving towards fees or towards taking a percentage of assets under management annually. The IFA therefore has a genuine interest in the performance of funds."