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Bank adviser numbers slump as RDR and misselling scandals bite

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Banks and building societies have slashed the number of front-line investment advisers they employ by almost a fifth in recent years in the wake of the RDR and numerous misselling scandals.

Analysis published by regulatory consultancy Bovills shows the number of bank staff authorised by the FCA to sell investment products dropped 16 per cent between March 2011 and March 2015, from 41,760 to 35,130.

The firm says: “Most of the large high street banks have either pulled out of providing financial advice on investment products or scaled back their advice models to only providing advice to higher income earners.

“This is due to the high costs involved in providing advice without being able to subsidise their service from profits from in-house products.”

Bovills head of wealth management and banks Mark Spiers says a combination of the RDR and tougher bank regulation from the FCA has driven the decline in bank advisers.

He says: “Pressure from the FCA for banks and building societies to move away from rewarding its staff on the basis of the volume of financial products they sell has forced most of the high street banks to readdress how they provide financial advice.

“That has precipitated a significant drop off in the number of staff employed to sell investment products at the banks.

“However, the introduction of RDR has not been the only factor driving the banks away from providing advice. The FCA has been particularly aggressive in going after banks that have implemented high pressured selling techniques, encouraging bank staff to sell products customers didn’t need in order to boost their bonuses.”

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Comments

There are 11 comments at the moment, we would love to hear your opinion too.

  1. I’m surprised the proportion isn’t considerably greater than just a fifth. And they weren’t advisers by any criteria recognisable this side of the fence. They were just hard-target-driven mass product floggers. Those who failed to meet their quota would swiftly find themselves on the road to being “managed out”. After-sales service just wasn’t and, as far as I’m aware, still isn’t, part of the flog/forget/move on to the next customer culture.

    This is readily apparent every time I see a new client who has something or other via a bank or building society that doesn’t seem to have performed very well at all and they’ve found that all their attempts to speak to somebody about it have, one way or another, been completely frustrated.

    But, hey ho, the FCA has more pressing issues on its plate, such as all those pesky IFA’s giving imperfect advice and over-documenting it all, hence nothing much seems to have changed.

  2. Christopher Petrie 27th July 2015 at 12:34 pm

    A 16% fall in bank advisers over 4 years, and an even smaller proportion of the IFA community – as some of us said at the time, concerns about RDR were massively overblown and – as usual – life goes on.

    In another couple of years people will struggle to remember what the initials RDR even stood for.

  3. I may be wrong but I read an FCA article recently which stated there were less than 4000 bank advisers now operating.
    The total number of financial advisers only number about 32000 so this is clearly an incorrect figure quoted in this article.

  4. Grant Mitchell 27th July 2015 at 1:47 pm

    I find the numbers quoted incomprehensible, so what are 35,000 bank advisors doing as thankfully you can no longer be pressurised into dog funds and inappropriate advice with any bank unless you have in excess of say £150,000 to invest, come on, you didn’t think for one minute they had gone away completely did you. Let us hope that those greedy bankers ( tempting to play word games here) don’t find a means of re-entering the general marketplace ever again. Good riddance. Julian Stevens paints the perfect picture and one we never wish to see again.

  5. I was going to make a comment, being an ex bank adviser, but I think I’ll pass.

  6. These numbers are barking! the FCAs own figures give us 2 dates
    November 2010 when the number of banking advisers was given at 8,750
    January 2014 when the number of banking advisers was given at 3,500

    Since January 2014 there have been mass redundancies including some of the 3,500

  7. Neil Liversidge 27th July 2015 at 4:44 pm

    You have to differentiate between the individuals and the institutions they worked for. Yes, the banks had them working like battery hens to pressure-sell. However the same banks also usually trained them to a very high standard. There’s no reason why they can’t make good IFAs in the right environment where the right ethics prevail and guidance is given. Firms looking to take on new advisers should give fair consideration to those made redundant by banks. Alternatively just go with the bigoted uninformed view of bank advisers and leave the cream to those of us without blinkers. I’ve never been a bank adviser but I have,very happily and successfully, employed one.

  8. “Analysis published by regulatory consultancy Bovills shows the number of bank staff authorised by the FCA to sell investment products dropped 16 per cent between March 2011 and March 2015, from 41,760 to 35,130.”

    I cannot believe there is anywhere near 35,130 FCA authorised bank advisers still selling investment products. I suspect the consultant who published the report must have been on the Bovril.

  9. Anthony Badaloo 27th July 2015 at 8:08 pm

    Bank Advisers ought to be on a salary to avoid bias. They should be independent, to reduce bias. That’s what the regulator ought to be encouraging, for the best consumer outcomes. Conflicts of interest cannot be promoted.

    Anthony Badaloo is Principle at Financial Advisers Church Hill Finance http://www.church-hill.net

  10. Julian Stevens 28th July 2015 at 9:03 am

    But even if they were purely salaried, they’d have to generate enough revenues to cover that salary. The level of revenues they generate would need to be set at, what, 3 x as an absolute minimum. So, somebody on a salary of £40,000 p.a. (+ benefits and other overheads) would still need to generate at least £120,000 p.a. of revenues.

    The flog/forget/move on to the next sale model is no longer acceptable in today’s regulatory environment. Intermediary businesses, both small and large, have to transition away from a purely sales driven culture to one where the initial sale is just the start of a long term customer relationship based on regular post-sale reviews, renewal of client contact and steady, recurring revenue streams.

    If the banks don’t transition their business models accordingly, they’re going to find life increasingly and relentlessly more difficult. The writing’s on the wall and they’ve got to read it.

  11. i would guess that the numbers probably include back office and support staff as Garry Heath’s numbers are right in regard to authorised and FCA regulated advisers. There is a lot of holier than thou stuff on this thread Having attended lots of seminars/workshops/conferences over the last ten years in my experience until RDR the level of knowledge and ethics of large numbers of “IFAs” was probably quite a bit worse than those working in bancassurer roles. Neil Liversidge is more accurate in his assessment of those working in bancassurance roles and the need to differentiate them from the culture within which they operated.

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