Life offices are warning solicitors to be guided by the quality as well as cost of investment advice, following the introduction of hard disclosure on commissions and charges on investment products.
Andy McNeill, business development consultant at Prudential, suggests that lawyers could gain the edge over other financial advisers as their practice of charging fees rather than commission is seen to enhance a product's performance.
But he warned the marketplace could be muddied by the impact that hard disclosure has on consumer confidence in retail packaged products.
The Prudential is among many life offices which are concerned that hard disclosure may divert investors away from offices with good past investment performance and returns, towards offices with cheaper charging structures but poorer investment records.
McNeill says: "If we bought everything on price, we would all be driving round in Skodas."
Meanwhile, solicitors and other IFAs are this month digesting changes in disclosure regulations introduced this month. Financial advisers must now clearly disclose the scale and impact of commissions and charges on life and pensions products, as well as clear information on early surrender values, before arranging policies.
But the Law Society has given solicitors until 1 July to meet further requirements that personalised documentation – client specific key features documents – is provided for clients at or prior to the point of recommendation.
Computer quotation company The Exchange, which is backed by the major life offices, is continuing to operate its established Videotex system which will remain "adequate" in the short term in dealing with the new regulations.
But marketing manager Julian Johnson says the firm is encouraging all IFAs to switch to its PC-based Common Trading Platform (CTP), launched this month. The CTP will provide a more efficient quotation system which complies with all the new rules on personalised disclosure, says Johnson.
Solicitors for Independent Financial Advice is endorsing the CTP. But managing director Ian Muirhead, welcomed the six-month leeway given by the Law Society in introducing client specific documentation.
The delay will give solicitors time to fully appraise the software options available.