Studies show consumers favour restricted chartered advisers
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In focus: Future of Independence
Evidence is growing that consumers will favour the choice of a restricted adviser over a whole-of-market, independent rival post-Retail Distribution Review, if the adviser in question has gone beyond QCF level four and attained chartered status.
A study published by product provider Skandia today (17 July), which gathered the views of more than 700 consumers, found that 86 per cent found chartered status to be attractive, with 67 per cent saying that would prefer a restricted adviser over an independent peer if they were chartered.
When asked whether they would prefer an independent or restricted adviser generally, 51 per cent said they would opt for independent advice, compared to only 1 per cent who preferred restricted.
However, 32 per cent of consumers believed the quality of advice was more important and has no preference regarding the adviser’s status. When asked about their thoughts on chartered status, 86 per cent found this to be attractive and 49 per cent said they considered it ‘extremely attractive’.
The study follows on from similar research carried out by the Chartered Insurance Institute, the accredited body responsible for administering chartered status, which found that almost two-thirds of consumers would likely favour a chartered adviser.
According to a survey of more than 2,000 consumers, of those who expressed an opinion - that is, when the ‘don’t know’ responses were removed - 64 per cent said they would be more likely to use a chartered practitioner than otherwise.
The research also found that the number of consumers who said it makes no difference to them whether a practitioner is ‘professional’ or not decreased from 13 per cent in 2009 to 10 per cent in 2012.
In addition to these studies, some currently independent firms are indicating a preference for chartered status and a diminution of the importance of independence.
As an example, national IFA firm Perspective Financial Group has told FTAdviser that it believes chartered status is “more important” than independence, stating that it is aiming to see all of its offices achieve chartered status.
In an interview with FTAdviser, Julie Hepworth, group regulatory manager at the firm, even admitted that it is still debating whether to retain its independent status post-2012.
She said: “Wherever possible we will remain independent but we are also very mindful and do not want to fall foul of any FSA requirements, so if we believe that we can’t meet that benchmark we are not entirely wedded to independent.”
Nick Dixon, Skandia’s marketing director, said his firm’s study showed that restricted advice has negative connotations and can be taken to imply that an adviser will only be able to recommend products from a very narrow set of providers.
However, he added: “It is the quality of advice that will be key rather than labels. As the research shows, demand for restricted advice with chartered status is likely to be high.”