What consumers believe 'independence' means (Consumer and Trade)
- 6 out of 10 state ‘independent’ means ability to search whole of market
- This increases to two-thirds* amongst those who have used an independent financial adviser
- Only 1 in 5** believe ‘independence’ should only apply to those financial advisers who are not paid by the product provider
Following the publication of the Retail Distribution Review on the 27th June, by the Financial Services Authority (FSA), Unbiased.co.uk, the find an independent financial adviser service, last week asked British consumers what they understand by the term ‘independence’ in the context of independent financial adviser (IFA). The findings give the clearest indication yet that the proposals from the FSA to allow advisers to classify themselves as independent even if they don’t offer products from the whole of market is flawed.
The findings reveal that almost six out of ten (57%) British consumers believe ‘independent’ means the ability to have unrestricted access to the whole of the market. At the same time seven out of ten (68%) believes to be classified as independent an IFA should not be owned by, influenced by or tied to a financial institution. By comparison, only one in four (26%) believe ‘independent’ means an IFA does not receive commission.
The importance placed on ‘of whole of market’ advice is even more prevalent amongst those that have had experience of using an IFA to manage their finances – be it a pension, mortgage, savings, investment or protection product. Amongst these consumers two-thirds (67%) say independent should only apply to those advisers that search the whole of market and only one out five (21%) say independent means those that do not receive commission.
David Elms, Chief Executive of Unbiased.co.uk comments: “This research reveals that consumers – whether they have experience of using an IFA or not – place much more importance on ‘independence’ applying only to those advisers that can offer products available across the whole of the market.
“This research suggests that the Retail Distribution Review’s proposals directly contradict the consumer’s wishes. As an organisation that has a long track record of putting the consumer first, Unbiased.co.uk has grave concerns that the proposals, if implemented, would lead to more unnecessary consumer confusion.”
The potential confusion that the Retail Distribution Review’s proposals could cause if implemented is also highlighted when consumers are asked to make a straight choice between whether the ability to search the whole of market or payment method is more important. Consumers emphatically choose the former. Of those that expressed an opinion:
75% say whole of market search is more important
17% say does not receive commission is more important
8% say neither is more important.
By using Unbiased.co.uk over 600,000 consumers a year already demonstrate their understanding of the value they place in the current meaning of independence (i.e. whole of market not payment linked). Over 75% of these enquiries come from third party referrers, including the Financial Services Authority. Consumers can search on payment method on Unbiased.co.uk (for example, specify fees only) – currently 14% choose to do so.
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For further information please contact:
David Elms | Andy Smith |
Chief Executive | Lansons Communications |
Unbiased.co.uk | 020 7294 3675 |
020 7833 3131 |
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For expert comment or case studies from over 200 media-friendly IFAs, journalists should call unbiased.co.uk’s Media Services hotline on
020 7294 3682 or search online at www.unbiased.co.uk/media
Methodology
2169 GB adults aged 18+ were interviewed by YouGov between the 6th and 9th of July 2007.
* This average figure is calculated as follows:
- 65% of 175 who bought a pension through an IFA believe independence means whole of market
- 49% of the 52 who bought a savings account through an IFA believe independence means whole of market
- 67% of the 124 who bought an investment product through an IFA believe independence means whole of market
- 67% of the 250 who bought a mortgage through an IFA believe independence means whole of market
(65% of 175) + (49% of 52) + (67% of 124) + (67% of 250) / 175 + 52 + 124 + 250 = 522/782 % = 67%
** This average used the same methodology as above.
- 23% pensions
- 17% savings account
- 22% investment product
- 20% mortgage
- 22% protection
1. Independent Financial Adviser Promotion
Unbiased.co.uk is the consumer brand of IFA Promotion, the organisation established in 1989 to promote the value and accessibility of independent financial advice to the public. It represents around 9,000 firms of independent financial advisers across the UK, incorporating over 17,000 registered individuals. These individuals hold over 20,000 incremental qualifications which are each individually verified by the awarding body. IFA Promotion welcomes the prominent display of incremental qualifications and further developments into the credentials of independent financial advice.
IFA Promotion is sponsored by 28 leading financial institutions, and in the past 12 months, over 600,000 consumers and businesses used unbiased.co.uk to find local independent financial advice.
IFA Promotion believes Independent financial advice should be:
Affordable. The option to take independent financial advice should be available, by right, to all- not just the wealthiest in society.
Convenient. IFAs should be available in the location of the consumer’s choice, wherever they live in the UK.
Transparent. It must be clearly transparent to consumers who is able to offer independent financial advice and who is not.
2. Independent Financial Adviser Promotion’s sponsors
Aberdeen Asset Management | Legal & General |
Abbey | Lincoln Financial Group |
AEGON Scottish Equitable Plc | Mortgage Express |
Alliance Trust | National Savings & Investments |
AXA Life | New Star Investment Funds |
Bright Grey | Norwich Union Life |
BUPA Health Services | Prudential |
Canada Life Ltd | Scottish Life |
The Children’s Mutual | Scottish Life International |
Clerical Medical Investment | Scottish Widows Plc |
Defaqto | Skandia UK Group |
Friends Provident | Standard Life Assurance Company |
Tomorrow | Unum |
Invesco Perpetual | Zurich Intermediary Group |
Registered Office: IFA Promotion Ltd, 90 St. Vincent Street, Glasgow G2 5UB. Registered in Scotland: No. 114606