Head of marketing Billy Mackay says the FSA’s RDR review has got the issues back to front.
Mackay says: “What is important is the quality of service and advice provided by financial advisers to their clients. Discussing the appropriateness of different models of remuneration for advice, and particularly commission, is looking at the issue from the wrong end. As long as the client appreciates the value of the advice and understands the level of remuneration and impact on their policy there is integrity in the model.”
Recent research by Scandia shows 90 per cent of advisers believe a choice of remuneration options, including fee deduction agreements, is already helping advisers evolve their business model and 84 per cent say regulation is not required to facilitate this evolution.
Skandia also claims that 69 per cent of advisers that are remunerated by some form of commission are opting for a fee deduction agreement, rather than traditional commission.
Mackay says: “The most important issue is that advice is available to those that want it and it is up to the client and adviser to agree the most suitable method of payment for their circumstances. Whether this is a fee or commission is irrelevant and certainly does not have any impact on the independence of the adviser.”