Legal & General RDR and commercial director Danny Wynn says the retail distribution review will have a big impact on charging structures in the protection industry.
He said: “The RDR may not directly apply to protection but it will have a substantial knock-on effect.”
Wynn believes there are three options for IFAs writing protection business after 2013. He said: “You could use separate, autonomous business models for protection and for investment business, you could charge fees for protection advice or you could charge fees for wealth advice and earn commission on protection.
“However, if you combine the two charging structures in one business model there is a possibility you will undermine the argument for fee-charging.”
Plan Money principal Peter Chadborn says advisers will struggle to charge a fee for protection unless it is part of a wider financial advice service.
He says: “It is widely accepted that charging a fee for protection will not work but many clients are willing to pay an annual fee for a comprehensive financial plan.
“You have to look at it as a package and incorporate protection with clients’ other financial needs. That is the most workable model, it is what we already do and I cannot see it changing.”