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‘Quality of advice counts for little with providers’

Only 35 per cent of providers value quality of advice offered by distributors as one of the top three criteria they look for when establishing strategic alliances, says Grant Thornton.

The findings contrast with the 71 per cent of distributors who believe quality of advice will figure in this top three.

Grant Thornton Financial Markets Group partner Ian Gorham says providers need to be careful when setting up business partnerships as the FSA is continuing to analyse the relationship between provider and distributor firms, with a shift of responsibility towards providers distributing wide-range products.

The research also shows 59 per cent of respondents across the industry believe there will be fewer providers in the marketplace in two years time due to depolarisation and 59 per cent says the new regime will cut the number of networks.

Gorham says although overall consumer choice may rise, further analysis suggests this will only be the case for low-end users, using banks and building societies multi-tie partnerships. More sophisticated users, typically serviced by IFAs, are likely to see choi-ces restricted, he says.

Grant Thornton surveyed over 200 financial services companies, including banks, building societies, life insurers, IFAs and networks.

Gorham says: “Companies must remember their duty to their customers as they look to take commercial advantage of the depolarised regime. Financial services firms have to be careful to take a long- term view and not be blinded by short-term commercialism. This need has not escaped the attention of the FSA.”

Hanson Financial Management director Nicholas Hanson says: “This does not surprise me as the priority for providers is always profit and market share rather than ens-uring quality of advice.”

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