IFAs believe commission will become less important in a depolarised market.
Speaking at a marketing round table meeting last week organised by Money Marketing and advertising agency Teamspirit IFA, Punter Southall Management managing director Arthur Allison said he believed commission would become a thing of the past.
Sesame marketing director Stuart Gitsham agreed, saying he believed commission was no longer the central issue for product providers and that life offices had limited resources left to offer extra commission.
Gitsham said that a company's business model rather than commission would be the crucial factor in determining a company's success after depolarisation.
Highlighting the way that markets operate in South Africa and Australia, Allison predicted minimal upheaval for UK IFAs once depolarisation is complete. He said the real pressure would be on product providers to maintain their distribution channels and improve their offerings to the separate advisory groups.
Chase de Vere head of marketing Stewart Cunningham highlighted the difficulties that IFAs face in convincing clients to switch to fee-based advice over commission. He said that advisers appeared to clients to be starting to charge for a service that was already apparently free.
Cunningham said: “The consumer has certain preconceptions about our industry – we do not have the luxury of starting with a nice clean page. We need to get them to value something so they will pay for it. There has never been a better time to offer advice -it has a value but what is difficult is how to articulate it and demonstrate that you are giving great advice.”
Allison said: ” I think that commission itself is going to die anyway, we knew that years ago. Multi-ties are nothing special. Either you establish yourself as truly independent, or as part of a network or multi-tie.”