Financial adviser survey counters FSC on churn
Elements of the Financial Services Council (FSC's) anti-churn approach appear to have run into strong opposition from financial advisers, with a new survey revealing a significant majority of planners do not agree with the proposed approach.
The survey, conducted by Guardian Advice among its authorised representatives, was aimed at gaining their views on the FSC's proposed measures on so-called "replacement business" within the life industry.
According to the survey, 71 per cent of Guardian advisers did not agree with the FSC's definition of replacement business, 88 per cent did not agree with five years being the right time-frame for replacement business, and 78 per cent did not agree with the proposed remuneration level on replacement business.
Just as importantly, 65 per cent of the survey respondents wanted takeover terms to be removed from any standard on replacement business.
Commenting on the survey results, Guardian Advice head Simon Harris said the group recognised the reasons the FSC had pursued its anti-churn approach, not least the Government's agenda with respect to its Future of Financial Advice legislation.
However he said the company believed only a small proportion of advisers arbitrarily churned business.
On the key question of remuneration levels, Harris said the survey clearly indicated the concerns held by many advisers, including that the removal of high upfront commissions would discourage new entrants into independently-owned advice businesses.
However, the survey respondents also indicated that there needed to be an appropriate difference between "upfront" and "ongoing commission" in order to reward advisers for their initial work while also encouraging clients to be reviewed by the same adviser.
The Guardian survey also traversed a number of other areas of concern for financial advisers, including time-frames for replacement business and trigger events such as marriage or the birth of a child.
Harris said the findings of the survey had been submitted to the FSC as part of Guardian's response to the FSC's consultation paper.
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