The Society of Financial Advisers (SOFA) welcomed the proposals of the FSA but is concerned on certa...
The Society of Financial Advisers (SOFA) welcomed the proposals of the FSA but is concerned on certain issues that these changes might raise.
"It was to be expected that the industry would go through some change," says Jo Smith, director of SOFA. "The FSA has been looking at this long and hard and has voiced out, in the past, that it favoured the abolition of polarisation."
"However, we are concerned that the adviser has to make changes and its business is limited to raising capital from untied businesses only. That would give the adviser lesser flexibility and financial strength to make the transition."
SOFA agrees with the FSA that it is beneficial for consumers to know about how much they are paying for advise but also argues that a fee based system is also good for the IFA.
Smith explains: "IFAs would have to be upfront with consumers about how much commission they are charging. A fee-based system would be a benefit for the adviser as he would be paid for the work he is doing rather than on the sales of products. Clients will start understanding when a commission is beneficial and when a fee is beneficial."
SOFA also upholds the belief that IFAs have the right qualifications to give advice. Smith points out: "Most of the higher tier of the IFA industry has the right qualification and experience but the importance of qualification is that it has to be recognised by consumers. As the industry accepts change, it should also recognise the value of the adviser."
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