View more on these topics

Menu makes IFAs much cheaper than direct sales

IFAs are revealed to be up to four times cheaper than services offered by their direct-selling rivals in the FSA&#39s menu proposals.

Despite a fierce rearguard action fought by the banks and other direct operations, the FSA has decided to apply the menu to them as well as IFAs rather than opting for the proposal set out by the banks.

According to figures submitted to the FSA 18 months ago by a steering group comprising trade bodies and product providers as part of the original menu proposal, commission paid to IFAs can be up to four times less than the commission equivalence earned by direct salespeople.

One product provider admitted to the group that, on a stakeholder personal pension paying in a regular premium of £300 a month, it would pay initial commission of £300 to an IFA compared with £1,168 to its tied agent.

Another said under the same circumstances, it would pay an IFA £805 initially but pay a direct salesperson £2,340 up front.

The menu will mean that all advisers will have to tell consumers at the beginning of the advice process how much it will cost them, and those remunerated by commission will have to compare their rates with the market average.

Direct-selling operations will have to do the same and only they will have to reveal commission equivalence, which is defined as anything that providers would be prevented from giving to IFAs under the indirect benefit rules.

However, there are fears that the FSA may tilt the balance back in favour of tied operations when it carries out a review of the methodology of commission equivalence later in the year.

Aifa director general Paul Smee says: “The menu gives IFAs the means to show how competitive they are, it is up to them to compete.”

Informed Choice managing director Nick Bamford says: “If consumers have not realised before that independent financial advice is best, they are going to realise pretty damn sharpish with this.”


Smith says Govt may compensate wind-up victims

Work and Pensions Secretary Andrew Smith has admitted that the Government will consider offering discretionary assistance to the 60,000 pensioners whose pension schemes have been wound up. Speaking in an Opposition half-day debate on Crisis in Pension Scheme Wind-Ups last week, Smith said he would not raise false hopes of compensation for people who have […]

SEI looks to expand US consultancy business to UK advisers

SEI Investments&#39 new head of wealth relations Chris Hylen says the multi-manager is to undergo a major repositioning which will see it branch out into bespoke business consultancy. Hylen was until recently director of communications for SEI&#39s US adviser network, where he helped build around 5,000 outsource partnerships with US advisory firms. But after the […]

Royal Liver joins Marlborough Stirling for IFA launch

Royal Liver is joining up with Marlborough Stirling ahead of its launch into the IFA market in the UK. Under a ten year contract Marlborough will offer Royal Liver its electronic quotation and new business transaction services via the Exweb portal. It will also use &#39Lamda&#39 Marlborough&#39s new business processing solution, that allows straight through […]

IFAP figures reveal big benefits for providers

IFA Promotion&#39s consumer and business hotlines and website generated £31m for IFAs in 2003, according to analysis by consultancy Mercer Oliver Wyman. The research quantified and tracked Ifap&#39s core IFA referral service. Its results show that IFAP has more than doubled the commission generated for member IFAs in three years from £14.5m to £31m. A […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers. Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm