Most advisers would welcome the introduction of customer agreed remuneration (CAR), but only on condition the FSA reduced regulatory fees, research suggests.
A study conducted by Zurich found more than six in every ten advisers would adopt CAR provided it included certain financial incentives and commission offsetting.
However, one in ten said they would leave the industry rather than embrace the new proposal, a key aspect of the FSA’s Retail Distribution Review (RDR).
The research, conducted using the views of 910 advisers, also suggests commission remains a popular choice of remuneration. Seven out of ten advisers indicated a combination of initial and trail commission would be their ideal choice of remuneration, whereas less than a fifth - 14% - said they would adopt a fee-only business model.
Advisers were split over whether they would be prepared to study for further professional qualifications. Nearly half of those surveyed - 46% - said they were not prepared to study further to obtain chartered status in order to avoid paying more for professional liability insurance.
However just over a quarter of advisers - 27% - said they would simply pay a higher rate.
Chris Gillies, Zurich Intermediary Group’s managing director says: “We support the FSA’s desire to encourage higher standards of training and professionalism; we have recommended a long transition period - six years - until the higher standards become mandatory, with positive incentives, such as reduced regulatory fees for those who achieve the new standards more quickly.
“This will be important to ensure that experienced financial advisers do not leave the industry, but have sufficient time to make the transition and can see clear business benefits from doing so.”
The research also examined the impact of the RDR on attracting new business into the industry. Zurich’s analysis shows that over eight out of ten advisers - 85% - believe the proposed changes will make it harder to attract new advisers in to the industry whilst less than one in ten - 2% - think the proposals will make it easier.
“We consider that the challenge for the future lies in attracting new talent into the industry to ensure sufficient availability of good quality financial advice,” Gillies says.
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