commission dependence holding advisers back

Less than 16% of advisers had their business models RDR-ready at the end of Q2, according to latest analysis from Equifax’s MyTouchstone database, only a slight improvement on the 10% that were ready in Q1.

commission dependence holding advisers back


Reliance on commission as a key income generator could go some way to explaining why IFAs are being slow to adapt business models, MyTouchstone continued.

Neil Cunningham, director and general manager, Touchstone Financial Analytics, said: "Other data from our RDR surveys in the first and second quarters of this year suggests that for a large proportion of IFAs, commission is still a key income generator.

"In Quarter 1 2012 our analysis showed that for 79.3% of IFAs, over 25% of their income is still generated by commission. In Quarter 2 this has only reduced slightly – to 74.4%.

"We think this continuing dependence on commission could have a lot to do with the current economic climate. It might be the case that IFAs are holding out to the last possible moment to change their business model to charge fees rather than earn from commission."

In terms of qualifications, just over 30% of firms have said all their advisers are qualified to at least QFC Level 4.

Meawhile, at the end of the first quarter, 55.3% of individual advisers said they were already QCF Level 4 qualified, while at the end of Q2 this had increased to 61.8%.

"There is nothing wrong with a planned transition, making the necessary changes on or around the year-end deadline. But some firms may still have some planning to do because actually there is still an awful lot of hard work needed in a very short space of time."

The research is put together using data uploaded by more than 1,000 IFAs, according to MyTouchstone.



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