Threat to 'restricted' advisers as consumers look elsewhere

Multi-tied advisers are way down the list of consumers’ preferred distributors for financial products in the future, behind even supermarkets and major retailers like M&S.

This will come as a blow to the many adviser firms that are considering offering ‘restricted advice' post-RDR as the requirements to be ‘independent' become more onerous.

Banks topped the list of preferred providers of the future with 63% of consumers, according to a survey from the Life Insurance and Market Research Association (Limra).

Building societies were second with 57% followed by IFAs who can sell any product on 42%. However, advisers offering a limited product range scored just 17%.

Retailers featured in the top half of the table, with 39% of those surveyed saying they would buy financial products from supermarkets and 29% from major retailers.

The survey also asked consumers to rate the groups they currently trust the most to sell or recommend good quality financial products.

A fifth of the 500 people surveyed had high trust in IFAs compared with 19% for employers and 17% for building societies.

Banks were in sixth place with 12% while supermarkets came in at ninth with 10%. Financial advisers who only sell certain products came twelfth out of 13 channels with 4%, ahead of only national newspapers.

Limra research manager Chris Heath says although investors trust IFAs to give good advice, the impact of the financial crisis is determining their buying decisions.

"Although consumers are keen to look at the independent nature of the people they are buying from, following the financial crisis consumers are looking for a certain level of financial strength," he says.

"The banks are unpopular, but on the other hand they are a tried and trusted channel. Supermarkets are seen as more approachable and they also have brand recognition.

"The challenge for IFAs is to create a brand people can latch onto."

Heath also thinks organisations such as banks are in a better position to cope with the challenges thrown up by the RDR.

"RDR and the financial crisis have meant a shift in the money situation. There is a kind of brave new world out there in the way distribution may look," he says.

"Bigger institutions are in a better position in regards to fees and they can cope with the middle ground which takes in a huge spread of consumers."