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Keep the menu simple

IFAs were left breathing a collective sigh of relief last week when the long-awaited menu was finally published by the FSA.

While the publication of the menu itself is noteworthy in that it allows the depolarisation exercise to proceed, it is the fact that direct and tied salesforces will be obliged to employ it which has been seen as the real victory in many quarters.

DSFs and tied salesforces will have to display commission equivalence, defined as salary plus anything which providers would be banned from handing to IFAs under the indirect benefit rules.

By this measure, the advice given by an IFA should prove to work out cheaper than that given by their direct-selling rivals in most cases, something the sector has long known but rarely been able to prove.

As an outcome of the polarisation review, the simple adoption of the menu appears to be a reasonable one. Advisers will have many possible decisions to make about the direction they want to take their businesses but they will only be obliged to tell consumers how much they are charging them and how that money will be collected.

Most will say they do that already and all the menu does is to formalise the process.

Fee-charging IFAs will have to do even less. Unlike their commission-earning brethren, who will have to provide an indication of how the amount they earn compares to the market average, fee-based advisers will not even have to do that.

So on the surface of things, the menu should provide clarity as to how much IFAs cost as compared to the direct channel. But like most of that which emanates from the FSA, the potential to overly complicate a relatively simple exercise bubbles away just beneath the surface.

Let us hope that for once it doesn&#39t.

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