More than 80% of advisers support the idea of a common level of commission to avoid perceptions of provider bias, according to a survey by Aegon.
The majority also believe IFA firms which the FSA deems to have a strong capital base and good systems for Treating Customers Fairly (TCF) should receive a lighter regulatory regime.
In addition, the Aegon IFA Insights survey revealed 88% would be dissatisfied with a total ban on commission as a means of remuneration, while 95% believe commission has a vital role to play because clients are unwilling to pay a fee for advice.
The research, based on IFA opinion of the FSA’s ongoing Review of Retail Distribution, earlier showed over half of IFAs see the Review as an opportunity to enhance their professional status, while one fifth see it as a threat to their way of working.
Graham Dumble, Aegon’s director of risk & regulation, said: “Our research reveals strong IFA opinion regarding some of the potential outcomes of the FSA Review.
“There is clear support for concepts such as a common level of commission between providers and lighter regulation for IFAs with strong capital bases and TCF systems.
“We are delighted that the majority of IFAs see the Review as an opportunity to enhance their reputation.
“IFAs have an important contribution to make to the debate as the work of the Review unfolds.
“It is interesting that while 88% of IFAs feel that it is not the right time for a ban on commission, 48% of IFAs agree that they would like to move to a fee- based structure, but their business strategy is dependent on regular commission payments.
“The FSA should be looking at how they can work with IFAs to help them achieve these aims.”
IFAs were also asked about business development strategy. Almost nine in ten agreed most of their new clients come from referrals from existing clients rather than as a result of any particular strategy, although the majority – 51% - have a strategy in place.
Dumble added: “One of the major challenges the industry is facing is finding new customers and we were interested to find out more about IFA business development strategies.
“The findings suggest personal recommendation and trust are still key to consumers in seeking financial advice – and that IFAs believe more can be done to play up the professional credentials of their sector.
“Over time those IFAs who rely on their existing client base for new customers might prove to be even more successful if they adopt new marketing and promotional activities.
Overall, the report suggests that IFAs are very open to new concepts in terms of the impact of incentives and moving the industry forward. The FSA must keep close to the IFA community as the Review develops.”
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Scott Sinclair on 020 7034 2636 or email scott,[email protected]IFAonline
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