ifas pushed to recommend inappropriate cash

Financial advisers believe there is regulatory pressure to recommend more cash-based products and fewer equity-based funds, research from BDO finds.

ifas pushed to recommend inappropriate cash


Surveys of more than 500 IFAs commissioned by the accountancy group showed 26% think regulatory developments such as the Financial Services Bill would lead them to recommend more cash products to their clients.

Furthermore, 29% expect the new regulatory climate to make it more difficult for them to steer their clients towards equity funds.

The poll also showed 89% of IFAs view equity-based collective investments such as Oeics as being appropriate or very appropriate for long-term investment growth, while only 42% view cash in the same way.

Despite this, 26% of advisers expect the proportion of clients’ investments held in cash products to be more or significantly more than present levels as a result of regulatory change. Only 4% said it will somewhat less and none thought it would be significantly less.

Alex Ellerton, director for risk and regulatory practice at BDO, said: “That a significant proportion of advisers concede that intermediaries will need to recommend more cash products and fewer equity products is highly significant because the latter are clearly the favoured product for advisers in terms of longer term investment growth.”

Some 53% of advisers believe the regulatory environment will have a negative or very negative impact on their ability to provide advice. Just 6% said regulation is having a positive impact on advice provision.

Ellerton added: “Good outcomes for consumers should be at the root of all regulation and the financial services regulatory bodies should take the opportunity to address potential consumer issues – such as reduced access to the most appropriate products and diminishing consumer choice – as regulatory expectations in respect of investment advice continue to develop.”



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