James says forcing advisers to improve their professional standards will make them realise there is more money to be made in other areas and lead to them to focus on investment and pensions.
He says: “The RDR is telling IFAs that they need to be more skilled, for example, with up-front conversations about remuneration. All this is likely to see IFAs upskill themselves and move up through the food chain. It is difficult to sell protection in a profitable manner and it could see a gulf develop between advisers that will lead to a large part of the population without access to advice and protection.”
CBK Colchester principal Peter Chadborn says: “Protection business is harder to write, more time-consuming and less profitable than investment and savings. If this gulf was to develop, the dynamics of the distribution market would change.
“You would see more protection-only firms and more general advisers starting to focus on other areas and possibly find they cannot justify the extra work in writing protection business.”