A Skandia survey of financial advisers has revealed that 62% intend to move all their clients to an adviser charging model within the next 12 months. The survey suggests that three-quarters of advisers will be operating on an adviser charging basis alone by mid-2015, with a further 16% saying they intend to move all clients to adviser charging within two years.
The survey results underline the speed at which adviser charging is being adopted post-RDR. This is supported by Skandia’s own data which shows that 30% of policies, accounting for 38% of assets held on the platform, already sit in an adviser charge environment.
The survey also highlights that the vast majority of clients are choosing to pay the advice charge for on-going service via the product. Three-quarters of advisers said that over 90% of clients choose to pay for on-going service in this way, citing client preference as the reason.
Interestingly this trend looks set to change over time as customers become accustomed to paying fees rather than commission. 10% of advisers believe a lot more of their fees will be paid directly by their clients rather than via their product in future and a further 47% think that a small element of their fees will be paid directly in future compared to today. Only 44% believe there will be no change in the way their fees are paid.
Michael Barrett, platform marketing manager at Skandia, comments:
“It’s clear that advisers are taking control of their own destiny post RDR and are actively taking steps to transition their clients from old commission structures to adviser charging. Our unbundled platform proposition is already fully compliant with the 2014 and 2016 platform rules. The large movement away from a commission to adviser charging model is a clear indicator that advisers are recognising the peace of mind that a compliant proposition can deliver to them and their clients.
“It is interesting that advisers anticipate that the pattern of how their fees are paid to change over time, with more clients choosing to pay adviser fees directly rather than via their product as they do today. This suggests that as adviser fees start to outweigh commission over the next year, customer understanding will increase and payment patterns will evolve.”
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