UK - Simplification proposals mooted by the government are forcing irreversible changes in the consultancy market, industry experts claim.
They say the Green Paper is acting as a catalyst for the migration of IFAs into the consultancy market and vice versa.
And they believe investment advice given on a more individual basis will challenge the working practices and fee structure of traditional players.
Towers Perrin principal Mark Duke said that with more firms moving towards DC, advice would become centred around individual employees rather than the company as a whole.
He said: “The whole pensions world is moving from a group focus to an individual focus – a move that will challenge the industry as a whole.”
IFAs agree that Green Paper proposals will blur the definition between investment consultants and themselves.
Hargreaves Lansdown pensions development manager Tom McPhail said: “With the way the pensions framework is changing, where the distinctions between occupational and personal become academic, there will be little difference between [IFAs and consultants].”
McPhail said this shift would mean greater competition for basic services and an increased focus on costs.
He added: “Investment and employee benefits consultants have been able to operate on a business model that involved fairly substantial annual fees.
“And while both ends of the spectrum face challenges, consultancies will have to redesign what they put in front of the client to justify the earnings they are generating.”
Momentum Financial Services pensions specialist Mark Stopard agreed there is a shift happening in the consultancy industry.
He said that individual member advice is becoming ever popular among employers – even though it is a high-cost proposition for advisers.
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