LibDem Lord Newby caused a storm at the LibDem conference by saying traditional IFAs were a doomed species. He says the strength of response from advisers has led him to re-evaluate his views.
Lord Newby, LibDem Treasury spokesman, has changed his controversial position on the future of IFAs and now believes there is a clear, ongoing demand for high quality advice.
Newby caused an outcry among advisers after his comments at the LibDem conference in Liverpool in September when he branded traditional IFAs as “a doomed species” and predicted a shift among consumers away from traditional advice to seeking free “advice” online.
Speaking at a fringe event, he said: “The regulatory requirements on IFAs are so great, the cost of giving advice is so great and I cannot image why anyone would want to do it. It just looks to me really, really hard.
“I hope people do take financial advice, but they will want it free and they will want it delivered electronically”
“I hope people do take financial advice, but they will want it free and they will want it delivered electronically.”
Given the depth of feeling on the subject and subsequent conversations with IFAs, Newby has since toned down his views.
He says: “The old-style IFA is clearly on the way out because the RDR is changing the rules of the game a lot. But what people have been at pains to point out is there are IFAs who are getting the various qualifications and providing advice for a fee, for whom there is clearly an ongoing demand for high quality personal financial advice.” (article continues below)
Newby says he is concerned that the advent of adviser-charging will lead to IFAs focusing on high-net-worth clients.
He says: “In future, financial advice will be quite different from what I think of as the traditional IFA model. This may mean that while the species is not doomed and will survive, it will end up servicing more of the top end of the market than everybody else, because people lower down the income scale who might have used an IFA before will not be prepared to pay for advice.”
Speaking at the conference, Newby said in future consumers would want free “advice” delivered online. Again, he has toned now his views, admitting it will be difficult to get specific personalised comprehensive product advice solely from the internet.
Newby believes the move to the new Consumer Protection and Markets Authority represents an ideal opportunity for advisers to campaign for change on long-standing issues such as the lack of a long-stop.
He says: “A new financial architecture is about to be established. As we move towards that every aspect of regulation is going to be under debate. In these circumstances advisers have the opportunity to raise issues about the way the system works under the current regime and why under the new regime it needs to be different. It is in that context that I think there is an opportunity to raise the long-stop issue or indeed anything else that advisers wish to correct.”