The financial advice industry should contain only one adviser role with a clear distinction between advice and sales, according to Lincoln Financial Group.
The firm says the potential introduction of four adviser posts suggested in the Retail Distribution Review (RDR) and the Thoresen Review would be confusing for consumers.
In addition, Lincoln says the proposed Customer Agreed Remuneration (CAR) model must be “completely transparent” to ensure consumers know what they are paying for.
Ian Noble, head of life sales and development at Lincoln, says the advice outlined in the RDR, which comprises Professional Financial Planners (PFPs) and General Financial Advisers (GFAs), will be confusing to consumers who “are likely to see GFAs as lesser advisers”.
He adds, with the addition of the Primary and Generic Advice roles as recommended by the Thoresen Review, this would potentially lead to four advice roles which would be too complex for the consumer.
“We have concerns over the formation of a two-tier advice model, plus the creation of Primary and Generic Adviser roles and the consumer confusion this could create,” he says.
“We want to see a single advice role in the distribution process, with a clear demarcation between financial advisers and sellers.”
Lincoln says there is evidence the intermediated market is already moving in the direction of the RDR, highlighting the number of advisers taking higher level qualifications or changing their models to focus on more sustainable ongoing revenue streams.
It welcomes the introduction of CAR as a “pragmatic solution” to the issue of separating the cost of advice and the costs associated with financial products.
“The majority of financial advisers already perform a valuable role in ensuring that consumers receive advice appropriate to their circumstances,” Noble says.
“We believe there are areas that require closer attention and consideration if the RDR is going to meet its objectives of creating a retail market where consumers are capable and confident through having access to clear, simple and understandable information.”
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First mentioned in Cridland Report