How can slashing fees be unfair to investors?

Talk about ruffled feathers. For one month only, Fidelity International is offering 0% initial commission on 30 of its most popular funds. Independent financial advisors (IFAs) aren't happy at all. Why not? Because the January sales promotion is only open to execution-only clients, not those who buy the funds through IFAs.

"Fidelity is effectively encouraging people not to take advice before making important investment decisions", said Adrian Lowcock, senior investment adviser at Bestinvest. "We do not consider this as fully in line with the spirit of 'Treating Customers Fairly'."

But in what world is it unfair to charge customers less? Fees have an enormous impact on investment returns, as we've pointed out before. So any development that allows investors to limit fees should be welcomed.

And while Peter Hicks, head of UK retail sales at Fidelity, says this is not the start of "an emerging trend", it does look like another nail in the coffin of commission-based financial advice. And really, IFAs in general should be pleased about that. With the FSA banning commission fees in the next few years, IFAs will have to look at alternative business models, and the sooner they do so, the better. Fee-only advice is one option.

But the really good news is that if fund management firms cotton on to the idea that they can attract more business by pitching to customers directly and offering lower fees, then that should help to focus both consumers' and fund groups' minds on costs. And hopefully, it should drive down annual management fees too. After all, if fund managers can no longer pull in extra business by paying commission to IFAs, then why encourage consumers to go through a middleman at all?