Direct platform positive step for consumers, IFAs say
Provider’s execution-only platform pays fees to advisers, provides access for non-fee paying clients
News of Axa Wealth’s decision to launch a direct-to-consumer platform has received praise from wealth managers despite early criticism of the introducer fees its pays to advisers.
Shane Mullins, managing director of wealth management firm Fiscal Engineers, said any service designed to encourage people to invest should be seen as a positive thing for the industry.
“Accessibility for everyone is absolutely fundamental,” Mullins said, adding that it is better for advisers to point a client to a more appropriate service where they can engage with the finance industry than to be shut out completely. “I wouldn’t want to think that consumers were restricted or not able to access advice,” he said.
Similarly, Alistair Cunningham, director of Wingate Financial Planning, said the platform will help investors who cannot pay for an IFA but want to become involved in their finances. He added it might lead to them seeking advice from an IFA further down the road.
Axa said its new Self Investor platform has been designed for people who are unable or unwilling to pay advisory fees once the RDR comes into force and pays advisers a commission for introducing clients to the service.
The platform pays an introducer fee to advisers whose clients choose to use it. This is paid as a percentage of funds under management held in a stocks and shares ISA only, paid monthly on a recurring basis, or a one-off amount based on the number of clients the adviser introduces to the service.
While some wealth managers questioned how Axa Wealth can pay introducer fees to advisers given the upcoming commission ban, Marc Davies, director of Axa Wealth Direct, said it is within RDR rules and is for execution-only clients.
“The fee can be paid either up front or by recurring fee amounts, which are disclosed to the client. There are FSA regulations which govern execution-only and direct offers, and the Axa Self Investor proposition through adviser firms is fully compliant with these regulations,” he said.
Davies added, “The introducer fees are not to cover costs incurred for giving advice to the client as no clients are being advised or recommended Axa Self Investor. The adviser firm is introducing the service as an execution-only facility, and the adviser firm is endorsing the offer as a suitable non-advised service.”
Another concern that was raised in the trade press was that Axa Wealth’s move into the direct market will unfairly compete against intermediaries and could be a sign the firm might be moving away from advisers.
While some might believe Axa’s move is direct competition against advisers, Cunningham said this is not the case,
“Axa gets a significant amount of business from advisers, so they can’t afford to disenfranchise intermediaries,” Cunningham said, adding that the sheer volume of business coming from IFAs is so great it would sound the death knell for Axa if they decided to turn their back on the sector.