Scaremongering on fees attrition peddles free advice myth
Yet another insidious study claims that majority of clients will not pay fees for advice.
One of the most unedifying trends to have emerged in the run up to the implementation of the Retail Distribution Review is the manner in which many interested parties are unashamedly purveying a calculated and contrived scepticism.
While the new rules are directed at financial intermediaries, the ripple effect of the new rules landing will clear have implications across the wider financial services sector. Everyone has a stake in how the new rules will shake out.
It is understandable in this context that much of the commentary coming out of firms in the sector is little more than hyperbolic polemic arguing in favour of an evolution that will inherently benefit their own position.
Thus we have providers of model portfolios asserting vehemently that outsourcing will increase, especially, surprise surprise, outsourcing via model portfolios. Discretionary managers are similarly unequivocating in their view that using discretionary portfolio services will see an increase.
These are fairly brazen attempts to promote one’s own business, but there are more subtle methods being deployed as well. For example, as I mentioned at the outset, many firms are offering a fairly gloomy prognosis of prospects for advisers and ‘lobbying’ on their behalf.
These studies are utterly worthless and peddle a myth of free advice that creates a damaging perception among consumers of advice costs post-RDR
Now call me cynical - I’m a journalist so it comes with the territory - but I’m not convinced that in many cases this represents genuine concern and is rather a way to build goodwill among a community that could represent a potential source of business.
This may be especially true if one were, say, a consultancy firm specialising in financial services. Should such a firm be able to show how advice business models will struggle post-RDR - and how it is supportive of advisers generally - it would surely be beneficial to its prospects for securing business in that sector to help firms cope with the changes.
Enough of these circumlocutions and onto Deloitte, the business consultancy firm that provides services to, among others, the financial services sector.
According to a study published by the firm this week, some 54 per cent of clients will not be willing to part with explicit charges for advisers when commission ceases post-2012. This is not the first study of its nature, but being based on a survey of 2,000 people it is ostensibly extremely worrying.
But lets examine the veracity of the claim. I’ve spoken before in this column about how many self-serving surveys claim to provide evidence of a potential crisis scenario for advisers post-RDR, but fail to provide commensurate information to respondents to make the results meaningful.