Insurance companies and fund companies with wrap platforms are “wolves in sheep’s clothing” and will be the biggest threat to advisers after the RDR, according to Succession Advisory Services chief executive Simon Chamberlain.
At Money Marketing’s RDR Invitational held in London earlier this month, Chamberlain said insurers and fund managers are using platform technology to hold on to their grip on the market.
He said: “The biggest danger to everyone in this market is wolves in sheep’s clothing, by which I mean insurance companies and fund managers. They have taken all the value by controlling funds and now those same firms are launching platforms, wraps and other vehicles to make sure people keep giving them money.”
Chamberlain also told delegates that he believed the Government and FSA are likely to fail in their plans to create a new simplified product regime, especially as there are no concrete plans for a simplified advice service.
He said: “Simplified products are for debt-laden people and they should be advised to pay off their debts and take a holiday.”
Paladin Financial Services managing director Tim Purdon says there is a risk in becoming too reliant on the technology.
He says: “Generally, technology brings added value and provides services that IFAs might find difficult to source but one wonders who it is serving. Insurance companies’ direct arms seems to offer better terms than those available to IFAs.”
He adds that the regulator’s recent warning alerting advisers over use of risk-profiling tools provided by platforms is evidence that advisers need to be careful.
He says: “More naive and less competent IFA may feel they are of use, but just because it is provided by an institution they still need to be careful.