Age UK and the Chartered Insurance Institute have urged advisers to develop low-cost ‘focused advice’ propositions to bridge the mass-market advice gap.
Citing a recent study by the Personal Finance Society, the report says 35 per cent of people would be more likely to use an adviser as a result of the RDR while 66 per cent do not access any regulated financial advice.
To help address this gap, the CII says advisers could offer focused advice on specific topic areas such as retirement and decumulation for a fixed fee or charged at an hourly rate. This would involve a basic “fact- find” and a guide to the client’s options but not advice on what the client should do.
PFS chief executive Keith Richards helped to develop the approach. He says: “No one has chosen to go down the simplified advice route because if you simplify the regulated advice process you could inherently inc-rease your risk. So we have deliberately stayed away from that term.
“A number of advisers already use focused advice and it might not be right for all firms. But people seeing advisers for the first time sometimes worry about cost and with this
approach clients know exactly what they will get and what it will cost. And the options report helps them quantify the value of advice and, as a result, they will often want to
engage the adviser under their normal charging terms.”
CII chief executive Dr Alexander Scott says Chancellor George Osb-orne’s “guidance guarantee” must provide the “right balance of information and direction” to enable people to make sense of their options.
The report says: “This [focused advice] would go some way towards addressing post-RDR mass-market access issues while giving the public the certainty they require about the costs involved and the types of advisers that are prepared to work with them.”
The PFS report, published in February, was based on a survey of 2,000 consumers. Of the 66 per cent of respondents who did not access financial advice in 2013, 38 per cent said they did not have the money to invest while 16 per cent said they could not afford an adviser.
Almost a quarter said they would rather make financial decisions themselves based on information from websites and newspapers.
Among those aged over 80, about one-third would turn to friends and family for advice first while just 6 per cent would use an adviser.
The Government has committed to providing “free, impartial face-to-face” guidance for everyone from April 2015. The report suggests a “portable fact-find” containing det-ails of a person’s savings, assets, pension funds and debts should be introduced as part of this reform.
It says: “With permission from the consumer, this portable fact-find could be shared with anyone giving the financial advice or guidance at any stage in their lives and could be updated as and when circumstances change.”
Sovereign Independent Financial Advisers director Mark Hibbitt
It could work for some firms and it would be cheaper to provide but it is not something we would do because we are advisers, not order-takers.
Aqua Wealth Management director Dominic Basilea
Any option we can give clients who are not extremely wealthy or think advice is expensive is a good idea. But it is important people rely on the experts because they might not understand the outcomes of the options.
Age UK’s view on the guidance guarantee
Age UK says the Government should:
- Develop a common curriculum for all guidance providers, supplemented by measurable quality standards to ensure high and consistent standards.
- Expand the Pensions Advisory Service or Money Advice Service to deliver guidance.
- Ensure there are good links between guidance providers, regulated advisers, debt agencies and tax advisers so people are referred to appropriate organisations for more help.
- Introduce a ‘portable fact find’ that could be shared with organisations the client is referred to.
- Plan ‘awareness-raising activity’ to encourage take-up of guidance.