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Low-margin business unsustainable, say IFAs

IFAs say low-margin mass market business such as stakeholder is not sustainable, according to this week&#39s instalment of the Money Marketing/Virgin One State of theIFA Nation poll.

The survey canvassed the opinions of 280 advisers, with 75 per cent saying that mass-market business is not aviable option.

IFAs believe their future lies in more specialist areas and advising high-net-worth clients who need tailored individual financial planning services.

The squeeze on margins is proving a massive pressure on IFA business plans, with

68 per cent saying they are planning to move their business up market because of the inability to operate under the 1 per cent stakeholder cap.

This view has been confirmed by IFAs reaction following the FSA&#39s polarisation proposals. Many are predicting that true IFAs will operate only in the top end of the market and firms will offer a multi-tied arm for mass-market business.

Ruth Whitehead Associates principal Ruth Whitehead says: “We have concentrated on offering an advice service to our customers”.

“We are consolidating on expanding our client base of high-net-worth individuals who want a personalised specialist advice service. It is the IFA&#39s business to provide this – anyone who just wants a stakeholder can use the internet.”

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