Depolarisation will lead to many changes within the industry, but exactly what these will be is, qui...
Depolarisation will lead to many changes within the industry, but exactly what these will be is, quite frankly, is still anybody's guess, says industry officials.
What is clear, however, is that IFAs themselves are having to consider which route to take out of the position they have now been placed in, both in order to further their own careers, and, in more than a few cases, to make sure that they retain some sort of financially rewarding advisory role at all.
This is the crux of the issue says Life Insurance Association (LIA) spokesman John Ellis.
"Industry costs are the real nub of the issue that depolarisation doesn't deal with. The reason direct sales forces are declining is because costs are rising to far, but to some extent the issue now being discussed is about re-arranging deckchairs on the Titanic," he adds.
Unfortunately for the wider community of IFAs, much of that re-arranging is going on behind closed doors.
For example, Misys, a significant force in the industry, is refusing to comment further beyond the press release it issued immediately following the publication of the FSA's proposals.
The statement says Misys agrees with the objective of improving access to and quality of advice, but diverges from the FSA's view that the best way to do this is by banishing the commission fee structure.
"Within our networks there is no evidence that commission payments influence advice in a material way," Misys' statement says.
"Indeed, the extensive product research capability and the robust monitoring processes adopted by our networks focus on what is best for the consumer, i.e. quality of advice, and not on any other factors such as remuneration. Enabling consumers to pay for advice through commission has meant that the advice has been available to more people."
That still does not answer the question as to whether Misys now sees the new regime as an opportunity to snap up smaller chains or individual firms, or whether it will forge alliances with other companies within the UK, or even across borders into Europe.
Hargreaves Lansdown is one of the few firms which is prepared to raise its head above the parapet. Peter Hargreaves, managing director, says in no uncertain terms the FSA proposals is to completely abolish polarisation.
Yet this will lead to its own corruptions of the industry, says Hargreaves. as any broker who does receive commission from product providers will effectively be taking backhanders from the life offices in the form of large, under counter commission payments
"We will be left with a strange situation where "independent financial advisers" will be funded by various different investment houses and life offices - how independent is that?," says Hargreaves.
Ann-Marie Martyn, currently at MyMoneyAdviser, and formerly chief executive of IFA Promotion, feels that networks are likely to become the big winners from the changes, but suggests smaller IFAs are unlikely to disappear.
"I can't believe that £30m worth of promotion over a 10-year period did not have any effect," she says.
"I don't actually think there will be a great change in the industry. IFAs will adapt to whatever regime is put in place and use their 'nous' to promote themselves."
Martyn adds that there are case studies to suggest switching from commissions to fees will not bankrupt businesses, such as Quay Associates who switched to a fee-bases system some years ago.
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