Consumers want whole of market advice

The Association of Independent Financial Advisers (AIFA) has released research highlighting the attitude of IFA clients towards financial advice.

When asked what they would expect from an IFA 96% of respondents said they expected an IFA to be able to select a product from the whole of market. Only 4% would expect to be offered a product from a shortlist of companies.

Chris Cummings, Director General, AIFA, said: “Our research confirms what the Financial Services Authority already know – consumers associate independence with whole of market. The RDR proposals that threatened to remove this link look like disappearing into the long grass.

“Research shows consumers understand and value the term independent. At a time when we are trying to increase access to advice and improve financial capability and education in the UK, the RDR should not have proposed compromising this?”

Consumers want the freedom to choose how they pay for advice

Almost half (46%) want to have a choice over how they pay for advice.

1 in 3 consumers think IFAs should be paid through commission with just 7% of respondents in favour of an upfront fee. 15% of respondents were in favour of customer agreed remuneration. Commission is more popular with lower income households. Almost half (44%) of those with a household income of under £25k prefer commission.

Chris Cummings, Director General, AIFA, said: “By retaining a commission option in the RDR, the FSA recognises that consumers should have a choice of how to pay for services and that a wholesale ban would discourage a large number of people from seeking professional advice. Our research supports this view. It is our firm belief that any commission option should also be disclosed upfront and transparently.”

Consumers take responsibility for their financial affairs

AIFA’s research found that almost 9 in 10 (88%) of respondents believe that they are ultimately responsible for their own financial affairs while 6.7% believed it was the role of their financial adviser, 4% said family and friends and just 1.2% said government. This echoes the results of AIFA’s YouGov research which found that 9 in 10 (91%) of all GB adults who have received advice from a professional financial advisor believe that they are ultimately responsible for their own financial affairs.

In terms of the relationship with a financial adviser, almost 70% have regular contact from monthly to annually. Over 1 in 3 (35%) of those surveyed stated that they had maintained a relationship with their IFA for 8 years and just under 1 in 3 (30%) for 15 years or more.

Chris Cummings, Director General, AIFA, added: “This important piece of IFA client research largely supports the findings of our recent wider consumer research carried out by YouGov. Consumers value independence and whole of market advice from professional financial advisers. Remuneration is not a key concern, however a choice of payment method should be offered.”