Financial difficulty looms for 265 top IFA firms

The IFA model is based on taking upfront commissions - its what motivates them and allows them to make a very decent living. However, churning, indemnity commissions and misselling are all too common. I for one have decided to quit after 15 yrs - none of my clients want to pay fees and RDR will mean the end of many huge networks

Posted by: Anon

Anon

re the comment above, good riddance to you. there are countless so called models in the IFA sector, however rolling out the line our clients wont pay fees says to me you do not add value. Flogging products is not adding value. If you were able to add value and clients could understand this you would have no problem charging fees. All our clients are fee based and have been on this basis since 1993.

Posted by: Anon

The way forward

If IFAs are not to be further marginalised the future lies somewhere between the fist two comments. RDR is a challenge but not an impossible one.For too long product providers have seduced advisers into selling their products based on remuneration geared to the annual premium while they earn their income from a% of funds under management. This recurring income model can now be adopted by IFAs through wraps.So transitioning to fees but paid for via the wrap is not so difficult IF you can demonstrate added value ie enhanced performance via regular reviews, model portfolios,auto rebalancing etc.The recurring income model also brings stability of cash flow and dramatically improves business valuations. it is a different mindset but does at least stop the need for chasing volume and concentrate instead on building client relationships.I would have adopted the wrap model regardless of RDR. It is the way Hargreaves Lansdown derive most of their income and every time the market goes up so does their income!!It is worth investigating but do it soon!!

Posted by: Duncan Jones