Financial advisers are switching to a fee-based offering as they respond to the current economic downturn, research suggests.
According to a study conducted by Axa Winterthur, six in 10 IFAs currently run a commission-based business but a third intend to increase their fee-based capabilities over the next 12 months.
Axa Winterthur says the shift is reflected in sales of its fee-based SIPP The One from Winterthur. It says the offering, launched in November last year, is now outselling its more traditional personal pension product.
According to Axa Winterthur, this is a direct response to the current market turmoil, with over 75% of advisers being hard-hit by the economic downturn - a quarter of these claiming the impact to their business is significant.
Six in ten say they have seen new business levels fall and 30% have seen existing business from clients decrease.
The insurer says most intermediaries are changing their approach to advising clients with 85% focusing their clients on the importance of taking a long term investment view, while 75% see the downturn as an opportunity to review clients' portfolios or as a buying opportunity.
And, as interest rates hit an all-time low, reducing income for many clients, seven out of 10 IFAs are providing advice on generating income.
"AXA Winterthur's research reveals how advisers are responding to the current downturn, the real impact of the current turmoil on adviser firms, with business levels decreasing for both new and existing clients," Mike Kellard, chief executive of AXA Winterthur Wealth Management says.
"Advisers, however, are adapting, with many refocusing their models to maximise business opportunities, with products like The One from Winterthur benefitting from this trend.
"This is good news, which hopefully will provide support to clients during the current crisis when they need it most, plus help hard-hit firms weather the storm."
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