The European Commission has been trying to introduce measures that make dealing on an execution only basis expensive.
Instead of taking a client's word regarding the financial product required, the Commission wants advisers to check the suitability of the product chosen, before processing the application. This obviously increases the time spent and the costs involved.
In the UK it is thought that around 60% of all financial transactions are done without advice. The move to check suitability would therefore have a huge impact for both advisers and clients. Although the move to introduce the new measures has been beaten at this stage, there is still a further stage when the amendments go before the European Parliament and Council of Ministers. They can make changes if they think it wise.
Our View
There are many people with financial knowledge who do not want advice when it comes to picking and choosing financial products. These people are known as execution only clients.
Basically, if you know what you want but just want someone to process the application for you, then many advisers (including us) offer this service. Visit the Policy Search and Buy Section.
As there is only administrative work involved for advisers and not advisory work that could potentially lead to complaints and liabilities, costs are reduced. The cost savings are generally then passed onto the execution only client.
Dealing on an execution only basis is also much less time-consuming and transactions can be done swiftly.