Legacy trail commission may create a "moral hazard" in which advisers encourage investors to stay in investments longer than they should, analysts at Barclays have warned.
A much-anticipated mass exit of IFAs in the first quarter of this year due to the implementation of the Retail Distributions Review (RDR) is unlikely, according to the analysts, but they expect a "continuous decline" of the sector over the next two to three years. The uncertainty of legacy trail commission - and the "moral hazard" it may create - is likely to be a particular catalyst for departures, said the analysts. "IFAs will be able to exist off legacy trail commission on those investments where they provided no new advice after 1 Jan 2013. This income can sustain them for some ti...
To continue reading this article...
Join Professional Adviser for free
Signup and gain exclusive members-only insights
- Unlimited access to real-time news, industry insights and market intelligence
- Stay ahead of the curve with spotlights on emerging trends and technologies
- Receive breaking news stories straight to your inbox in the daily newsletters
- Make smart business decisions with the latest developments in regulation, investing retirement and protection
- Members-only access to the editor’s weekly Friday commentary
- Be the first to hear about our events and awards programmes
