Two-thirds of investors would stop using their independent financial adviser (IFA) if the adviser began charging an hourly rate, says research in the UK.
The result is worrying for IFAs because the retail distribution review (RDR), which comes into force at the start of 2013, will stop IFAs earning commission on investment products. IFAs will have to charge their clients a fee for advice.
The survey of 2,030 adults by Legal & General Investments also found that 34% say their IFA has the most influence on their investment decisions and 24% are unsure of how they will make investments after the RDR comes into force.
“The notion of paying for advice has been one of the main bones of contention for industry and investors alike since the announcement of RDR,” says Simon Ellis, managing director, Legal & General Investments.
“Although a fee based model is supportive of a transparent relationship between and adviser and client, the level of consumer aversion to it at this late stage is concerning.”
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