‘Absolute travesty’ if only rich can access IFAs – Cardy
Advisers should consider using different charging structures depending on client needs
Independent advice must not become a reserve of the rich, according to one trade body.
Gill Cardy, managing director of the IFA Centre, said it would be disastrous if the average person on the street was priced out of independent advice.
Speaking at the IFA Centre Independence Day conference today (4 July), Cardy said, “I do not want independent advice to become synonymous with advice for rich people.
“I don’t want independent advice to equal high net worth. I think that would be an absolute travesty.”
Cardy argued different charging structures could be used for different clients, saying some transactions would be more costly to carry out than others.
“In my experience, it is time that is expensive, not anything else,” she said, suggesting pricing propositions low on time but not quality.
She said concerns about not being able to service lower end clients post-RDR had been over-emphasised.
“If a client is not paying very much for their advice now, let them not pay very much for their advice in the future,” she said. “It’s a radical thought, but if you are happy to advise a client when it doesn’t really cover your costs, carry on.
“If you are giving your advice away for free now, please feel free to carry on in the future. I think it is a mistake, but you can still do it.”
Cardy expressed concerns over using a percentage basis for a charging structure, arguing that the value added by an adviser does not decrease because of a drop in investment value following poor market performance.
“If you are worth what you are worth as advisers, why do you link what you earn to the value of the assets?” she said.
She added charging on a percentage basis might give rise to a conflict of interests since a client spending their money might reduce the adviser’s remuneration due to a reduction in assets charges are based on.
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