Concerns surrounding the protection market make the perfect case for the importance of tied and multi-tied advice, according to Ernst & Young.
The assurance and advisory service firm says consumers need to be “pushed rather than guided” into buying protection and long-term savings products, and argues tied advisers may be best placed for this approach.
Multi-tied and tied business models have faced criticism for their links with provider firms and the RDR’s apparent preference for advisers offering whole of market advice suggests this may not die down.
But Shaun Crawford, insurance leader at Ernst & Young, says tied firms have an important role in the financial advice arena.
“It is clear that a section of society needs to be pushed rather than guided into buying protection and long-term savings products – and this should start from the focus of consumer need,” he says.
“This is the big unanswered question within the RDR interim review and it will require a lot of work from providers – and particularly banks – over the next few months to convince the Financial Services Authority (FSA) that there is a real need for tied or multi-tied advice.
“The FSA now urgently needs solutions from the industry and not questions and challenges.”
In its RDR interim report, the FSA said in order to help simplify the future landscape of the industry for consumers there must be a distinction between advice and sales.
It says it wants to introduce a ‘step-change in standards for advice’ which will apply to the whole IFA community.
The multi-tie business model, born out of the FSA’s depolarisation move in 2005, has previously been described by its detractors as “selling your soul” to a provider.
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