It seems all roads are leading to independent advice.
At a time when independent advice is being thrown into uncertainty by the Trea sury and FSA's decision to relax polarisation rules and introduce multi-ties on Cat-standard Isas and stakeholder pensions, companies are queu ing up to get a piece of the IFA action.
Financial service providers appear to be falling over themselves to supply independent advice either through linkups with IFA firms or by establishing an internal IFA division, all of which appears to be a positive endorsement of the IFA sector.
Online fund supermarket Egg is the latest player to join the rush to move into the IFA market following hot on the heels of HSBC internet and telephone arm First Direct and Virgin One.
Egg wants to offer clients advice, initially on Isas and banking products, through an online link-up with an IFA firm.
Egg Investments marketing director John Casey says: “We will offer customers all the help they need to sort out their finances. We are interested in making advice available because a number of customers said they would like to get advice from Egg.”
IFA Roberts Clark director Ashley Clark says he is not surprised by companies wanting to offer independent adv ice. He says: “These big brands have realised they have got to give independent advice. I welcome it because it helps to raise the profile of independent advice. This is a logical approach.”
He says offering independent advice is the only route for companies hoping for credibility as a financial services operation and retaining clients on a long-term basis. Competition in the marketplace is increasing, particularly on the internet, and customers want choice.
First Direct says its move to the IFA sector was driven by customer demand. Its research found that 50 per cent of customers only consider buying products after seeking independent advice.
Head of customer marketing Patrick Piearcey says: “We need to become independent to provide customers with more choice. We are reacting to the way the market is going and from feedback from our customers. Impartial advice is an important and valuable move for us.”
First Direct says growing customer awareness means people are no longer satisfied with accepting products from one supplier when they are increasingly aware that other products are available.
Virgin One wants to generate up to half its business through intermediaries. It is building an IFA sales team which will work to develop relationships with intermediary firms. The company says 12 per cent of its current sales are through IFAs.
Communications manager Andrew Smith says: “A lot of people value face-to-face advice. We acknowledge that and want to appeal to those people who would not necessarily come through the internet site or call us directly. IFAs are a very important business channel for us and this is a positive signal that we are entering the market.”
Maddison Monetary Man agement was one of the first intermediary firms involved in a pilot IFA scheme with Virgin One.
Maddison managing director Mark Howard says he expected more companies to recognise the value of independent advice and make a move into the sector.
He says: “In today's market, the consumer is king and demands choice. Any company investing millions in financial services needs to offer independent advice bec ause, without it, you drastically reduce consumer choice. You are dead in the water if you only offer one company's products.”
In a market thriving on consumer choice in products, independent advice is increasingly in demand.
Despite the decision by the FSA to abandon the concept of polarisation, consumers are proving that independent advice is an essential requirement for consumers and pro viders alike.