Ernst & Young says the mutual sector is “well positioned” to fill the void left by banks that are no longer willing to provide financial advice to the mass market.
Axa and Santander have both closed their advice arms in recent months. Other major banks such as Barclays and HSBC will only offer advice to people with assets above a minimum threshold.
This has led to concerns people who do not have large sums of money to invest will be unable to access financial advice.
In a report published this week, Ernst & Young says mutuals may have a significant role to play in advising mass market investors.
The report says: “Building trust and shared interest with customers is key to driving value, and we are working with a number of organisations to explore how they can retain and reward their existing customers better, as well as attract new ones.
“Mutuals may also be considered well positioned – both philosophically and in terms of their existing relationships – to serve the mass market, to re-engage with the vast number of ‘orphan clients’, to address the ‘advice gap’ opened up by RDR and even to serve the financially disenfranchised.”
The report also suggests mutuals could benefit by “partnering” with other mutuals to offer a broader ranges of services.
It says: “Partnering amongst the mutual sector to offer a broader range of propositions or simply to streamline processes could provide a real source of competitive advantage.”
Rowley Turton director Scott Gallacher says: “Mass market advice is dead. Mutuals and PLCs have had five years to develop a model that is profitable and if they could have done that, they would have.”