Testing the waters with FSA proposals
Fidelity Investments has conducted a survey on the attitudes of UK advisers following the release of a set of proposals by the UK industry regulator Financial Services Authority (FSA).
Designed to remove the polarisation regime, the proposals would effectively remove the current distinction between financial advisers that are independently owned and advise across all products and companies and those tied to an institution and sell only its products.
Advisors wishing to be classified as independent would have to give up commission payments in favour of a defined payment system that outlines all fees in advance.
Based on the analysis of 7000 questionaires despatched by Fidelity in mid January this year, only 12 per cent of advisers indicated they would retain their independent label and opt for a fee-based business model.
An overwhelming 40 per cent indicated they would opt to continue being remunerated through commissions and 21 per cent indicated that if the regulations allow it, they would try to combine both remuneration approaches under one corporate umbrella. Only 2 per cent indicated they would opt for a multi-tied arrangement.
According to the survey, 55 per cent of advisers surveyed thought the biggest risk of the new proposals is that the status of advisers would be too confusing for consumers. A further 40 per cent highlighted the financial strain of moving from a commission basis to a fee basis would be too great for many independent financial advisers.
Should the proposals go through, 49 per cent of advisers surveyed perceived banks with multi-tied arrangement will emerge as their main business competitors. Independent financial advisers that remain commission based but are no longer regarded as independent came in second at 20 per cent and firms that adopt the new definition of independent financial advisers came in third place at 15 per cent.
Life companies that multi-tie and former independent financial advisers that mutli tie were perceived as the fourth source of competition, both on 7 per cent.
Recommended for you
With the final tally for FY25 now confirmed, how many advisers left during the financial year and how does it compare to the previous year?
HUB24 has appointed Matt Willis from Vanguard as an executive general manager of platform growth to strengthen the platform’s relationships with industry stakeholders.
Investment manager Drummond Capital Partners has announced a raft of adviser-focused updates, including a practice growth division, relaunched manager research capabilities, and a passive model portfolio suite.
When it comes to M&A activity, the share of financial buyers such as private equity firms in Australia fell from 67 per cent to 12 per cent in the last financial year.
