Nearly one in two IFA firms in danger of being squeezed out of the advice market

Fidelity International warns that general advisers could see their business seep away to fee-based firms and banks

Fidelity International today gives warning that nearly one in two independent firms are at risk of being squeezed out of the advice market under proposals outlined in the Retail Distribution Review.

In a poll of more than 500 firms, 44% responded that they would become General Financial Planners if the Financial Services Authority presses ahead with a three-tier model of retail investment distribution.

Peter Hicks, Head of IFA business at Fidelity, says the minority of firms which currently charge fees and would, under the discussion paper's proposals, retain the independent tag, would attract most of the business of high-net worth clients.

At the other end of the spectrum, the banks would target investors of more modest means.

Peter Hicks says: "The risk for general financial planners is that they may simply be squeezed out of the market".

"Fee-based firms would be the natural selection of high-net-worth investors and the banks may well concentrate on the mass market".

"General practitioners could find themselves between a rock and a hard place".

""It would be a travesty for these advisers, many of whom have been in the industry for decades and have invaluable experience, if they were forced out of business as a result of these changes and even more of a loss for consumers who would miss out on their advice and ongoing relationships".

""Advisers are happy to work with the FSA toenhance the industry's reputation and professionalism, and to help make their expertise available to a much wider audience more easily".

"At the moment these proposals are likely to do the opposite and we aim to work with both advisers and the FSA to reach a productive solution." Fidelity International Limited ("FIL") and its subsidiary companies serve the major markets of the world by providing investment products and services to individuals and institutional investors outside the US.

The FIL Organisation manages a total of £145.0 billion of assets.

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