Cost of investment advice to rise after reform - survey

LONDON (Reuters) - Most people will find it harder to get investment advice when commission-based selling of financial services is banned in Britain next year, according to a survey published on Monday.

The poll, commissioned by asset manager Allianz Global Investors, found six in 10 financial advisers saying reforms of their industry will make advising those with less than 50,000 pounds ($80,000) in liquid assets unprofitable.

One in three planned to reduce service levels to less wealthy clients and 16 percent will turn them away altogether.

The Retail Distribution Review (RDR) will transform the way advisers are paid, in a bid to draw a line under two decades of mis-selling scandals.

Allianz has said some people could be left with no professional advice at all when reforms take effect on January 1.

Just 13 percent of advisors said they would continue to advise smaller customers.

The survey also found customers were likely to have to pay more, post RDR, for the same level of financial advice they receive now.

Based on the survey finding that 86 percent of advisers charge 100-200 pounds per hour, the current percentage fees for a portfolio of 50,000 pounds in liquid assets would amount to less than two hours financial advice a year.

That advice would typically cover issues including pension provision, tax planning and general administration.

"Our research indicates investors with less than 50,000 pounds in assets will have decreased service levels or worse still, be left with no professional advice," said Nick Smith, Head of Retail Sales Europe at Allianz Global Investors.

Some 14 percent of advisers have changed their fee structure already to retain smaller customers, such as by increasing fee rates, either by percentage of assets or charging a flat fee or an hourly rate.

Smith said he expected more "outcome orientated" funds where, for example, advisers choose funds that match the client's risk profile, as opposed to hand-picking each investment. These funds allow advisers to service a large section of their clients at a lower cost, Smith said.

($1 = 0.6241 pound)

(Editing by Dan Lalor)

Source: http://news.yahoo.com/cost-investment-advice-rise-reform-survey-110022560--sector.html

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