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Tier pressure inflates costs

Low-tier advice, or as some call it more harshly dumbed down advice, may not be the answer to everyone&#39s prayers after all.

Research by consultancy AT Kearney suggests that a lower-tier advice distributor firm would need sales of nearly £500,000 per salesman per year to turn a profit.

Of course, the research is not definitive as it required the consultancy to create its own model for testing. Others may find imaginative ways around the financial hurdles – it did not, for example, test AMP&#39s trail-based direct advisers – but it must surely give pause for thought to policymakers and regulators.

If the private sector is to be harnessed to help close the savings gap, whatever size the gap may be, then it must be allowed to make a profit.

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