Advisers expect rise in DIY investments – L&G
Investors will stop using IFAs if they begin charging by the hour, research from Legal & General Investments has claimed.
Almost two-thirds of investors in the survey said they would stop using the services of an adviser if they began to charge an hourly fee. Those with bigger portfolios worth more than £200,000 were marginally less likely to turn away from IFAs after the retail distribution review.
Simon Ellis, managing director of Legal & General Investments, said: “IFAs are expecting to see a rise in DIY investors in the next 12 months. Our research now shows consumers are planning to stop using the services of IFAs altogether if they begin charging by the hour, which supports the assertion that the total cost of investing for a consumer will go up in the post-RDR world.”
Mr Ellis said there was room in the market for both advised and non-advised sales, but warned that the benefit of good quality, independent advice was “invaluable” and it was risky to push consumers towards non-advised sales by necessity rather than by choice.
He added: “The implications for both the industry and consumers cannot be underestimated. Investors run the risk of eschewing advice due to its cost which could severely affect their investment decisions.”
Dean Smith, director for Bristol-based My IFA Friend, said: “If we can prove to clients that we are worth what we charge and explain the benefits and how we can add value, then I don’t see fees as a problem.”