Industry: IFAs criticised for not doing enough to compete with retail providers
IFAs need to do more to promote the need for advice-based sales if they are to win the battle against execution-only suppliers. The news comes in light of growing criticism levied at direct retail providers, such as Sainsbury's, selling term assurance products.
Currently, protection IFAs are in revolt claiming that non-advised sales are mis-leading and do not treat customers fairly. "Without advice, more suitable or even less expensive solutions will not be made known to the customer. Sainsbury's is not offering its customers choice. As it is tied to one company, it cannot be competitive or suitable for everyone," said Kevin Carr, senior technical adviser at LifeSearch.
However, David Severn, director general at the Association of Independent Financial Advisers, said the criticism levied at execution-only distributors is absurd and that IFAs should do more to generate business. "IFAs need to flaunt their independence more. They cannot rest on their laurels and wait for the customers to come to them. There will always be some people that want to shop around, but they are very much in the minority," he said.
Responding to the criticism from the IFA community, Jonathan Hewitt, business development director at Sainsbury's Bank, said: "To not give customers the choice of buying on an execution-only basis is not treating them fairly. Some customers will want advice, and that route is available to them. Others just want a simple offering and that is available too. Not all IFAs offer all products."
Despite recommendations from Which? that advice services should be "chosen for more complex products such as income protection, critical illness and life assurance," Robin Gordon-Walker, spokesperson for the FSA, said: "To compel someone to take advice when they do not want to is limiting choice. The advice is there if they wish to seek it."
However, the IFA community is calling for more to be done to ensure consumers are aware of the limitations of buying directly from retailers. "We are not concerned about losing business to supermarkets and to suggest this is missing the point. Of course customers can be expected to make an informed decision, but surely they must first be given the information with which to make that choice," added Carr.
