Falling commission levels on pension products represents the greatest strain on the survival of financial adviser businesses, new research indicates.
A survey from pension specialist, Scottish Life, questioning 781 IFAs, finds 60% of advisers believe the spiralling trend of commission rates is proving a major threat to their business.
Trailing far behind, 15% of respondents believe bancassurers and direct sales forces to be a great threat, while 8% point to the introduction of the menu as a potential enemy to their livelihood.
Moreover, close to three quarters of respondents don’t believe moving the cap on Stakeholder style products to 1.5% would make such products any more viable.
Head of communications at Scottish Life , Alasdair Buchanan, says the findings highlight the need to structure an appropriate payment system for IFAs.
Buchanan adds: “The trend across the life industry has been to cut rates now and deal with the consequences later. This is proving to be a damaging strategy and isn’t one that Scottish Life is interested in adopting.”
Scottish Life, will launch an extension of its Financial Adviser’s Fee (Faf) to group pensions in July.
The new products will enable advisers to select a befitting remuneration at scheme or individual level, to be funded by explicit charges from the product, the group says.
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 Gareth Vorster on 020 7968 4554 or email [email protected].IFAonline
To promote 'long-term investment'
Switching 'hard and expensive'
Smaller funds still packing a punch
To drive progress