Restricted access to advice was predicted as a consequence of the Retail Distribution Review and identified as a reality in the Financial Advice Market Review.
If the supply and demand dynamics favoured the investor, ie there were more IFAs chasing fewer clients, there would be more competition and price disparity. So, if the FCA thinks there is a problem it should look at its own contribution to it.
I also wonder if the FCA thinks there is price clustering of fund manager charges? AMCs are typically around 0.5 per cent, 0.75 per cent or 1 per cent a year. It looks very similar to that which it thinks is dysfunctional among advisers.
Regarding the article ‘Lords to probe shake-up of IR35 rules’ (Feb 6).
I am currently a contractor in the automotive industry through an agency, and have been for the past 17 years, abroad as well as in the UK, at many different manufacturer facilities.
Under the terms of my contract I get paid for work on specific projects. I use my own tools, and I don’t receive sick pay, holiday pay or a pension. I can have my contract cancelled without reason with just four weeks’ notice and yet I’m told I fall under the IR35 net.
I’m clearly not an employee of any of the companies I have done work for and will most likely end up unemployed as a result of this, along with thousands of other contractors, and have to close my limited company. It’s utter madness.
In response to the article ‘Advice fees branded uncompetitive as price clusters revealed’ (Feb 5).
I believe the industry’s broad brush approach to categorising 0.5 per cent, 0.75 per cent and 1 per cent fees without context is unhelpful.
There really need to be sub-categories within these headings before any kind of conclusions can be drawn.
A decade ago we could probably assume that 0.5 per cent was a normal ongoing fee, however, the shape of the advice probably entailed the client being in a multi-asset fund and serviced once a year, or even biannually.
This ‘servicing’ would probably amount to nothing more than valuations and a quick check on circumstances. This may still be the case in some companies.
Now we have a situation whereby companies like ours have a large amount of our clients in our adviser and provider-run MPS solutions/DFMs being rebalanced quarterly with the client being seen perhaps every six months.
The work involved in creating and managing an MPS solution is huge and the resource outlay is extremely expensive.
There isn’t a way to gauge the competitiveness or not of a charge without first disseminating the service being offered for that charge.