The recent article on "discounters" was long on sensationalism but short on facts.
1: Where is the evidence that "fund firms are unhappy at paying renewal commission"?
If they are, why is this now spreading rapidly to other products?
2: It is plain wrong to suggest that "clients get advice from IFAs then buy from a discount broker". In almost six years, I can only recall a handful of examples of members of the public going elsewhere for advice on Peps before approaching us.
Industry statistics show that half of the IFA community are unconcerned about Peps. The other half do little more than send out a circular or two each year. Show me one IFA who is prepared to arrange face-to-face meetings to discuss Peps. The reality is the economics of Pep commission militates against the face-to-face approach.
3: Your simplistic contrast between "order-takers" and "IFAs providing full fact-finds and ongoing advice" smacks of a "four legs good, two legs bad" Orwellian parody.
Do you really believe that discount brokers are simply order-takers? Perhaps you also believe that the "full fact-find and ongoing advice" good guys enjoy a monopoly on expertise?
Discount brokers do win business from others but, in my experience, 33 per cent of the time they are in competition with other discounters as investors shop around.
True, we also talk to a great number of people who have phoned companies direct in response to ads in the weekend press. However, those who respond to company ads are seldom loyal investors of that company. For the most part, they are casual enquirers. We all get those. Some you win and some you don't.
Discount broking at its worst may well be "order-taking" but at its best it constitutes a highly efficient, informative and, for the client, cost-effective method of investing small capital sums.
It also achieves something which the financial services industry has always chosen to ignore – quality advice to the low-income-earner and those with meagre savings.
It seems not to occur to the majority of IFAs that 50 per cent of Britain's working population earns under £15,000 a year. Why should decent financial advice be inaccessible to these people?
As an industry sounding-board, you are in danger of falling into the trap of believing the propagandist line that discounters are bucket shops.
Why not take an objective view of comparing the quality of advice provided by discounters?
If you can find a "full-commission" IFA who has provided the general public with more meaningful information on Peps this year than us, then I will send a £1,000 Christmas cheque to the charity of your choice.
The Pep Shop,
West Bridgford, Nottingham