Consumers who want to buy execution-only financial services products should be able to buy them f...
Consumers who want to buy execution-only financial services products should be able to buy them from an IFA without paying the full cost of advice, according to the AITC.
Speaking on polarisation at the Unit Trust and OEICs 2001 conference in London today, Daniel Godfrey, director general of the Association of Investment Trust Companies (AITC) said there was "plenty of room for improved standards" in relation to charges and polarisation across the entire financial services industry, however, the issue of how consumers are charged, in particular, needs to be addressed.
Godfrey said it was "obscene" that consumers who want to make up their own mind about the products they use and use an execution-only broker can still be charged 1/2pc for the advice they do not receive.
"I don't have a problem with execution-only brokers, but people have to prove that they are adding value. People should not have to pay the total fee for advice they are not getting," said Godfrey.
Despite his criticism of the IFA sector, Godfrey stated that he was not in favour of depolarisation, because he felt the growth of multi-ties - which he predicts is likely to be seen most in the IFA and national networks - would lead to a worsening of charges.
"The real problem is that manufacturers are likely to woo IFAs over to become multi-ties with ever-increasing incentives. Consumers will get worse advice and the whole process will get more expensive," said Godfrey.
"This issue is based on a fundamental misunderstanding of the marketplace. It is based on a belief that manufacturers are fighting for the chance to sell products. This is not the case, they are fighting for distributors.
"There needs to be a change in the volume of incentives given to IFAs, and away from sales. I do not believe the client should pay for advice when they want execution-only products unless they believe the adviser is adding value."
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