IFAs outperform banks and building societies

by Gill Montia

Story link: IFAs outperform banks and building societies

Which?, the consumer group, has issued a report in which it suggests that independent financial advisers (IFAs) are providing consumers with better advice than many banks and building societies.

The Association of Independent Financial Advisers (AIFA) has welcomed the findings and its director general, Chris Cummings, has said that “the report made it clear that advisers working for organisations and ‘tied sales staff’ can only offer a limited selection of products”.

At the same time Mr Cummings is raising concerns that reforms planned by the Financial Services Authority (FSA) may result in IFAs become the “preserve of the wealthy”.

The FSA is currently working to determine the root causes of inefficiencies in the financial services market and this is likely to result in changes to the FSA’s current regulatory approach.

As a result, many IFAs could find themselves struggling to maintain their businesses because a new system of regulation could mean that fee-based IFAs would attract the high net worth investors, leaving IFAs opting to become General Financial Planners in a highly competitive market.

The changes could result in those on lower incomes have no choice but to use “tied advisers” or High Street banks for financial advice

The Which? report did also discover some unsatisfactory work by IFAs and warns consumers to choose their adviser carefully.