Just 8% of financial advisers say they are ‘very concerned’ about being fully transparent with clients about advice fees, down from 13% last year, according to research carried out by Old Mutual International (OMI).
OMI surveyed 180 respondents from across the UK, Europe, Middle East and Asia six months ahead of the planned implementation of the Isle of Man’s Conduct of Business Code.
The code stipulate that clients must be given a full breakdown of all fees and charges in a bespoke key information document.
The regulations, which have already been pushed back, are expected to come into force on 1 January 2019.
Ready for the change
OMI’s research found that 60% of advisers were ‘not concerned’ about fee transparency, an improvement from 54% when the survey was carried out in 2017.
The firm stated that the higher confidence levels suggest that the majority of the sector is well prepared.
The life insurer added that “many financial advice firms recognise how this change can help provide better outcomes for customers and build value in their business models”.
“The research shows that almost half (46%) have already transitioned their business model to take less upfront commission, with a further 11% in the process of doing so.”
Overall, 92% of advisers said they see the benefits of moving from full initial up-front commission to taking more on an ongoing basis, the firm said.
Of them, 63% agreed that moving away from upfront commission would help build better long-term relationships with clients, with 69% saying that it will improve the value of their business.
Embracing regulatory change
Peter Kenny, managing director of OMI, said: “It is reassuring that confidence levels are growing as advisers embrace regulatory change and increasingly see it as a good opportunity for their proposition and for clients.
“The research shows that more advises are thinking about the advantages of building longer-term relationships and embedding value in their business by moving away from upfront commission to an ongoing fee model.”
