Despite the numerous legislative burdens placed on them over the years, IFAs have proved remarkably adaptable and able to produce opportunities where only problems seem to exist. The myth of the commission-hungry salesman belies the fact that IFAs have proved to be the lowest-cost distribution channel for most providers, have the lowest level of complaints and expend huge amounts of effort ensuring the best deal for their customers, regardless of the remuneration available on any product.
The current changes being debated are not likely to alter the attitude of most of these advisers or the service they give to their clients but will the clients' attitude change?
From research conducted by Misys, we see that clients are not likely to pay any more for advice in the next couple of years than they do now. Will any new structure make it any more likely that the public will start to contribute more for retirement, ill health or death planning?
Will any new structure close the £27bn savings gap or is this caused by a complex welfare system and lack of understanding of the principles and the need to save?
A new client is attracted to an adviser through advertising, word-of-mouth referral or other lead-generation method. Following any changes brought about, the number of people approaching advisers could rise or fall. That is an uncertainty for business planning. However, an existing client is different.
All the research conducted with our 4,500 advisers shows categorically that their existing clients trust them, buy them and their expertise and the status of the adviser becomes somewhat secondary. In effect, as the saying goes, look after your client servicing and they will look after you.
For advice on areas such as retirement options, clients will continue to turn to specialist advisers who have access to the whole market.
Given that the vast majority of funds are relatively small, most clients are not likely to be willing or able to pay for advice by defined payment. Obviously, for bigger funds, the options open to clients are wider but the authorised adviser can offer just as good a service as an independent adviser provided that they have access to the whole market and far better flexibility than those who are tied to a smaller number of players. In effect, the adviser makes the difference.
One of the great features of the system of remuneration by commission is that quality independent advice is available to, and accessible by, those who could not otherwise afford to pay for it. Thousands of small employers and individuals have benefited from this system since 1988 and will continue to benefit from the same service from authorised advisers in the future. IFAs can rely on their clients to stay where they are, despite all the changes, as, in effect, nothing material will have changed for the client. Is it really that simple? Yes, if an IFA is offering the level of service that a client demands – not necessarily needs.
Misys is acutely aware of this with the member feedback we receive. That is why we are investing so much shareholder capital in developing a desktop system called mi-solution. This is interlinked with product provider support and a streamlined advice process that enables members to do their job as efficiently and competently as possible. At long last, technology will be an enabler and provide smart business development through smart compliance, while making advisers' lives easier.
Andrew Bedford is director of marketing at Misys IFA Services