The government should allow adviser charging to be facilitated via Lifetime ISAs to make advice on the products more attractive, provider AJ Bell has said.
Almost half (45%) of about 200 advisers AJ Bell spoke to in March thought enabling adviser charges via the LISA would encourage more clients to take up the product.
Under current LISA rules, adviser charges are classed as the chargeable withdrawal, meaning they would incur the 25% exit penalty.
The government's latest design note confirmed charges could be taken from the LISA to pay the LISA manager without incurring the charges but no such provision was made for adviser charging.
AJ Bell admitted adviser charging may not be feasible in the early years of the LISA when portfolio values are small, but said this would change over time as the product became more established.
Head of platform technical Mike Morrison (pictured) said: "It makes no sense for adviser charging to be prohibited for LISAs when it is allowed for ISAs and pensions. We know that the Treasury wants the LISA to be a success, so it is strange that it is not prepared to make a simple change that could help that - the Government should be encouraging people to take advice about their savings, not putting barriers in the way."
He added: "We risk ending up in a situation where clients have £50,000 or £100,000 invested in a LISA but are not able to pay for advice via that product. Worse still we may have people who miss out on the opportunity to build such a pot because of this barrier to advice."
Hargreaves Lansdown chartered financial planner Danny Cox agreed one day in the future people will want to take financial advice based on the value of their LISA. However, there was good reason not to pay for that advice via the product itself, he said.
"It's important people understand that if they take money out of a tax wrapper pot, they are diminishing the amount of tax-free savings and investments they have in that pot, "he said, "there's actually a good argument to say they should be paying those sorts of fees from other resources."
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