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Nationwide pilots fee-based advice service

Nationwide Building Society is testing a fee-based advice service as it gears up to launch its RDR offering.

The UK’s biggest society will deliver its advice through its single-tie agreement on investment business with Legal & General. Nationwide extended its single-tie with L&G last year, which will be in place until 2016.

Advisers will use the investor portfolio service provided by L&G, operated on the Cofunds platform, in which L&G has a 25 per cent stake.

Nationwide has not yet finalised its charges or how advisers will take their charges. A spokesman says: “We have agreed a five-year extension to our existing investments distribution agreement with L&G. This arrangement will enable us to provide our members with access to a range of investments and high quality advice from our team of professional advisers. We will offer RDR-compliant advice from the start of January 2013.

“The charging structure has yet to be finalised. We are still testing our proposed charges with customers and will confirm these once they have been fully agreed.”

Money Marketing revealed in February that Lloyds Banking Group plans to split its advice arm between basic protection advice and a “financial planning service”.

It is yet to announce further details on how it plans to charge customers for the financial planning service.

Royal Bank of Scotland says it will announce details of its RDR advice proposition in due course.

When Barclays withdrew its advice arm last year, commentators took this as a sign that other banks would follow suit and decide against offering branch-based financial advice.

Atkinson Bolton Consulting director Simon Gibson says: “The success of these advice services will come down to whether the likes of Nationwide and others can make it work from an affordability point of view. One imagines Nationwide has spent time and effort thinking about this and has come to the conclusion that it can.”

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Comments

There are 23 comments at the moment, we would love to hear your opinion too.

  1. I was annoyed with Nationwide yesterday as they would not transfer my cash ISA (to another Nationwide ISA) without a passbook and suggested I report it lost and order another book, then they can cancel it! BUT today they redeemed themselves as a second cashier said nonsense, I will transfer it right now. Sounds good news on this RDR offering.

  2. David Quarrell APFS 12th April 2012 at 2:01 pm

    So People are expected to pay fees for tied advice ? Good Luck !

  3. ..it’s all looks a bit incestious…and they want the the investor to pay for advice….use an IFA

  4. While I believe all “Financial Advice” should be conducted on an Independent Basis, it sounds like Nationwide have got their act together and being specific and open with their clients. As long as the ensure clients do know what they are buying and how their offering is structured, I see no problem with this.

    Many networks and IFAs still have to embrace the fee charging modus operandii and post 2012 there will be an inordinate amount of confusion when “restricted” advice comes in.

    Why are the people who regulate this industry not on message, IFA is the best consumer outcome and all the RDR is doing is making life more difficult for clients and advising firms alike.

    Pity the poor consumer who just wants to protect their family, their income and plan for a comfortable retirement and get good returns without undue risk to capital.

    As the saying goes in B & Q “Once it’s gone (IFA ) it’s gone!”

  5. The “advisers” will be targetted for sales which makes a nonsense of being “fee based”. The “fee” will be outrageously low – say £25 or £50 and of course they will pour more money into the coffers of L&G, who give Nationwide a kick back to subsidise the low fee.

    It makes a total nonsense of RDR but what else do we expect?

    Why on Earth would a consumer pay to be told to invest in a tied investment arrangement?

  6. Marty (Im an IFA) 12th April 2012 at 3:07 pm

    Ladies and Gents – Lets not get too carried away. It really doesnt matter if an adviser is single tied. If the client needs ISA, pension or investment they get it – plain and simple. Our advantage is we can search wider for a better pension (possibly) but who is to say that we will get it right for the client all the time _ We are not God’s you know. Isnt it better that clients buy into our industry to have a pension in the first place or a bond/UT or ISA? I say good luck to Nationwide. I hope it works for them – I doubt it will but I do hope it does

  7. Why is ifa the best consumer route Ned when it’s IFAs that have recommended arch cru, key data etc?

    Is that protecting their wealth without undue risk?

  8. yet another FSA sanctioned & closed shop deal to scam the public?.. we have had PPI & Endownment missselling& over priced insurance etc all supposed to protect the consumer…

  9. It is good news that the larger financial services providers are trialing their service at last.

    However, it does now seem a more common-sense approach to allow a transitional period for RDR to come fully into effect (or not!), in order to see whether, now that the guidelines are generally in place, mainstream institutions can make the service work…After all, it is our industry and we are the ones charged with making it a success, not the FSA (or their successor), this was made clear by a certain FSA manager last week I recall!

    Once in place, we reach the point of no return and whilst I am sure that the FSA do not wish to be compromised on RDR, I don’t think that a decision to allow a trial period would be badly received by the advising community. In fact quite the reverse. After all, if the main providers with their captive audience and breadth of choice cannot make it work, then….well you know the rest!!

  10. Paul Stocks (IFA) 12th April 2012 at 3:59 pm

    Some valid points but I had to smile when they said they would have an RDR compliant proposition come Jan 2013 – hardly proactive!

    I disagree about the kickbacks comment given the princiles of RDR. L&G may be able to reduce their costs based on volumes but it’ll be up to Nationwide whether that’s passed onto the client or they take it as remuneration. Eitherway, clients will be able to compare cost of product and advice which is the aim of RDR.

  11. The Nationwide is well place to start fee based trial’s at highly subsidised rates due to its current business structure. There staff I assume are saleried and this will be a bolt on to their normal business

  12. IFAs – it’s good to know who our friends are !

    Open door for cross-selling and stealing clients.

  13. Why would anyone pay a fee for tied advice ?

  14. Of course NW will charge a low fee say £25-£50 to set up an investment but what will probably happen is L & G will add an extra amc onto their fund which the client will pay for and NW will probably get some of it back from L and G. Advisers will be paid a basic salary which will be covered bt the extra amc IFA,s will lose out as it will appear NW is giving good adic at low cost Ah AH

  15. Why would I want to pay for tied advice ? From banks with a horrendous mis-selling record ? With a high staff turnover ? Whose staff still have selling targets ? Nationwide, NO Thank You.

  16. Devil's Advocate 12th April 2012 at 5:44 pm

    I have just taken on a new client who has an ISA portfolio through Natiowide with L&G mentioned and I thought the statement looked rather like Cofunds!
    Anyway, playing Devil’s advocate, provided the fund choice on the Nwide Cofunds operated platform is exactly the same as Cofunds available to IFAs, what is the difference between an IFA who ONLY uses one wrap (say Cofunds) and Nationwide?

    We use several Wraps and Platforms (which is a pain in the proverbial for us) to try and ensure we have the most appropriate fit for the individual client.

    Posted anon, to avoid lynching…..

    I do think Independant advice is best, but think we need to focus more on whose agent we are, the provider or the clients and as such, I think a Restricted approach with a clear explanation may be where a lot of those IFAs including me end up by about 2015. It’s worth trying to stick with IFA in 2013 to see if it is doable and how the FCA & FOS handle things, but I suspect it will force all but a view to go for Restricted by setting out clear restrictions which are reviewed like a panel, but don’t meet the new Independant definition.

  17. becoming a headcase IFA 12th April 2012 at 6:01 pm

    Anonymous @ 3:11pm
    You are such a fool. Do you have no knolwedge at all. People would have lost money in their bank accounts if the public hadn’t bailed the banks out! Keydate had money stolen from them and how could an IFA predict that?
    I suppose you believed that depsoit accounts were the safest thing around.

  18. I found this article and message string interesting as I am an IFA who is seriously considering applying to Nationwide for an advisor role. I am finding the transition to advisor charging difficult as a small business and looking at their website far from offering a tied service they offer pretty much the same thing as I do. Through Co – Funds they appear to offer most of the top funds I offer and presumably chose them from the whole of market cofunds option. The annuity service uses most of the companies I tend to end up using etc etc. Personally Nationwide is a brand I recommend and use as they stand out from the banks. I think most of you delude yourselves if you think as IFA’s we offer so much more, we have to learn to compete on the quality of our personal service..

  19. Devils advocate

    The nationwide advisers may use Cofunds platform but they will only have access to L&G funds I suspect. There is no way NW would take on the risk of their advisers recommending funds from the whole of market!

  20. Nationwide is currently tied to L&G and has negotiated such a high commission rate on protection plans that their customers pay 30% more than IFA clients and even 30% more than the customers of Barclays who have a similar tied arrangement.

    Companies that take this approrach should drop the holier than thou cloak and admit that they are as predatory as any shareholder driven organisation.

    Pious mumblings don’t cut it – actions tell their own story.

  21. Pensions, Investment, Protection and Mortgages. That pretty much sums up the advice market. Post RDR the only change for banks will be that they can charge a fee for doing what they already do.

    The FSA does not care about consumers getting the best advice. Their view is that having any pension, investment or protection plan in place is better than having none at all.

    Banks in theory should give the same advice as any independent adviser with only a restriction on the products they can choose from. However, they will no doubt still be working to targets which instead of being how many products they sell, will be based on how much they can bill their customers for every day/month/year.

    Before too long they will be offering fee free advice to those who have a premium account or pay £2000/mth into a zero interest current account.

    Cynical, me? Never…

  22. Devil's Advocate 13th April 2012 at 4:47 pm

    @ Becoming a headcase – I don’t understand what you are getting at?

    @ Gary (IFA) My thoughts exactly.

    @ James Espirin – The statement I have for the client who is using Nationwide L&G on what looks like Cofunds has funds with L&G, M&G, Jupiter, Schroder & First State. About 30% only being L&G.

  23. Why would I pay for tied advice from a one trick pony salesman ?

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