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Apfa research: Half of advisers have turned away clients post-RDR

Almost half of advisers have turned away lower value clients since the introduction of the RDR, research suggests.

A survey of 250 financial advisers carried out by NMG Consulting found that 47 per cent have turned away clients this year on the basis that the cost of their service has become disproportionately high for some clients’ needs.

Of those who had turned away clients, 40 per cent said they had turned away five or more clients in the year.

Apfa, which commissioned the research, says it suggests thousands of customers have been priced out of professional financial advice.

Apfa director general Chris Hannant says: “Coupled with an overall reduction in the number of advisers, there is a real cause for concern over the public’s access to financial advice.

“Until the FCA addresses the issue of the cost of regulation the situation will persist; advisers will service fewer clients and fewer people in the UK will have access to advice.”

Hannant is calling for the FCA to reduce its fees to reflect the lower regulatory risk posed by the adviser profession given that advisers are better qualified as a result of the RDR.

He says: “By reducing the overall cost of advice the regulator can increase access to advice.”

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. The fact that advisers are turning away potential clients because of the cost is no surprise. With higher living costs people just cannot afford an upfront fee that is realistic. The FSA never took notice of the industry when told this would happen. We are seeing people not saving for retirement which after yesterdays announcement re retirement age is now more important than ever. Someone who could afford £100 pm is priced out of advice will try and do it themselves and probably make a complete mess

  2. I have never turned a client away and nor will I. Some have told me where to get off when they see that I have a minimum of £645 to do: A F.F, Action plan, research, ATR report and letter of recommendation (all of which are non specific in terms of provider and funds). I dont blame them in the slightest, especially if they are looking for an ISA home or some other modest investment/savings/pension. That minimum minimum is derived by workig out my total costs (apart from tax and NI) and adding 25% profit margin. VAT is also liable on this if they do not want to implement the action plan (or in old money…. buy the policy).
    There will be more and more of this as time goes on. Still the FCA say that web solutions will help bridge the advice gap. The web cannot give advice, they can give you decision trees but how does that tree take into account the soft fact gathering and client interaction involved in our bisiness? It doesnt and connot, so as much as Mr W thinks the web is wonderful it cant provide any advice gap reduction. IMHO of course. Maybe some smart arse out there might want to try to prove me wrong. Good luck with that one though

  3. Web solutions can bridge the gap – but only when the FCA produces a web specific source book. Know your client is a different proposition when drop down boxes and expert system decision trees are all you have, but at the moment the rules are the same for both approaches.

    As a ‘real’ human would I expect to give ‘better’ (more valuable) advice than an expert system? Absolutely, and as a result I will be justifiably more expensive – but there needs to be good provision for the mass market; workplace solutions and web solutions are the only answers being offered which include ‘advice’. But as yet treading into those markets is fraught because the regulator will apply rules written for face to face wholly personalised financial intermediation.

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