I must be the only person who is not getting this. How is it bad news for IFA’s that the banking model which was consumer detrimental has been made unworkable. Clients have always paid for advice, most IFA’s told their clients clearly what the costs were.
The issue has always been that tied advice is never good advice, it is always over priced and rarely even close to best advice and misrepresented as being Free.
As with most of us under the old model, I would very often work extremely hard for not a lot, and then sometimes do not a lot for a lot. I welcome the opportunity to not be beaten with the TCF stick because I will not need to tolerate the type of person who thinks they can waste my time because it does not cost them anything.
Less “competition” equals more business for professional advisers so I win. But complex rules and frankly stupid regulation (such as most aspects of RDR) lead to a less advised public – shame on the FSA.
The regulatory classes learnt nothing from stakeholder – just because it is cheap does not mean people will buy it.
I have sympathy for those made redundant, those who couldn’t pass the QCF level 4, those people who wont pay a fee but as a businessman this removal of the last bank is brilliant news for me.
The loss of bank advice might well increase some advisers business but at what cost?
Many of my clients were introduced to the concept of saving or insuring by a bank (or industrial branch office) and then progressed to whole of market advice. Many would not have made the quantum leap to WOM advice had they not been prepared by their bank.
Consider also whether it is better to rid the market of bancassurance or better to clean it up so that it provides a worthwhile conduit for those many clients who will never approach an adviser.
Looks like advisers have forgotten just how much worse off clients are going to be under RDR.
Try getting an RDR ready quote from a provider for a £100000 bond, which has no initial charge, no withdrawals and based on 3 + 0.5 per cent.
Then compare that to the current system of commission of 3 + 0.5 per cent. By the time the client get to the 10 year point (even at the middle growth rate) check out the difference in values.
Client is thousands of pounds better off under current system. On top of that, currently providers can offset commission payments made to advisers as business expenses for corporation tax. Under adviser charging they cant so guess what the product charges are going to increase. Who pays that? Oh yeah the poor client.
Some time ago a journalist responded to comments I made on the web (the only one ever, so hats off to him for that) about the level of bad advice.
The gist of his comment was “you should see the piles of complaints we get in weekly about financial advice”. To him the complaints were the whole of his world and demonstrated just how bad things were.
What appeared to pass him by was the millions of consumers who did not complain. Sit in the middle of a sewer and one could be forgiven for believing that the whole world was crap.
And that is the problem with the FSA and its solutions. The only see the problems, so to them the market is a problem. Certainly there are problems and addressable problems, but the system will never ever be perfect.