From the Editor: Will it be battle lines drawn post-RDR?

A piece of research from the Association of British Insurers (ABI) really got advisers’ backs up this week.

It is not the first study, and will not be the last, to predict what consumers will be prepared to pay for advice post-RDR.

The answer is not a lot as half of the 2,500 people surveyed said they would shun fees altogether. Of those prepared to pay, their limit would be around the £300 mark–less than half the current average cost.

The ABI used the research to show the clear need for a simplified advice model, which is currently the subject of an FSA consultation. It also said the study highlighted the need to explain to consumers that full advice is worth paying for or the aims of the RDR will not be met.

So why were IFAs up in arms? Well, the subject of whether consumers could reject an adviser’s move to fees is obviously an emotive subject. For many advisers putting a value on their services is difficult however they charge and they know post-RDR the market will become even more competitive as consumers weigh up different pricing options.

However, the bigger issue here taps into a fear the insurers and banks would be delighted if consumers did start turning away from IFAs. Here is the big providers’ opportunity to target the disenfranchised through a simplified advice model. Many advisers may offer a simplified service for some of their clients but undoubtedly the bulk of these clients will be looking to the big providers for guidance.

Although advisers often fear provider attempts to skew the market in their favour, there must be room for many different types of advice post-RDR. After all, many insurers still rely on IFAs as their main distributors and they should have a vested interest in promoting them too.

The ABI is right to identify the key challenge will be ensuring consumers know what they are getting and what their money is paying for. The longer-term challenge will be ensuring any extra fees are worth it for consumers and they are getting the level of service and recommendations they deserve.

Katrina Baugh is editor of Professional Adviser and IFAonline.co.uk