A financial adviser’s status as a highly qualified Chartered Financial Planner is more important to the majority of people than whether they are an independent financial adviser according to a new consumer study conducted by Skandia.
With the Retail Distribution Review changes now less than six months away, the research examined how consumers feel about the two types of financial advice available to them in 2013, independent and restricted. The results were interesting. On the face of it, over half of consumers said they would prefer an independent adviser, but delve a little deeper and chartered status emerges as the real winner.
When asked whether they would prefer an independent or restricted adviser, 51% said they would prefer an independent adviser, compared to just 1% who said they would prefer restricted. However 32% of consumers believed the quality of advice was more important and did not mind whether the adviser had independent or restricted status.
The research then asked consumers their thoughts on chartered status, the highest level of qualifications a financial adviser can achieve. 86% found chartered status to be attractive, with 49% considering it extremely attractive.
Skandia then tested which was more important, independent status or chartered status by asking people what they would prefer: restricted adviser with charted status or independent adviser without chartered status. Two thirds (67%) said they would prefer a restricted adviser with chartered status. This clearly shows it is the expertise of the adviser which really matters to consumers.
Nick Dixon, Skandia’s Marketing Director, comments:
“The research shows that the word restricted is a poor way to convey the reality of the type of advice it can deliver to consumers. The term itself has negative connotations. It can be taken to imply that a restricted adviser will only be able to recommend products from a very narrow set of providers. In reality a financial adviser will be able to recommend all investments apart from the most obscure hedge funds and still technically be classed as ‘restricted’.
“Demand from customers will eventually determine the shape of the adviser market. The majority of customers may require access to a wide range of products, but are unlikely to require access to the whole of the market. It is the quality of advice that will be key rather than labels. As the research shows, demand for restricted advice with chartered status is likely to be high.”
Do you know what consumers can get bad advice from anyone, the industry drives change and that can be good as well as bad. Consumers know what they know and advisers have qualifications but it doesn’t mean that Joe Public gets good advice.