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MM leader: Words aren’t enough to solve advice gap

Natalie Holt, journalist with Money Marketing Photo by Michael Walter/Troika

One accusation often levelled at the FCA is that it is not sufficiently clear in setting out what it expects from firms.

In its defence (which does not happen very often in these pages) it has tried to overcome this through its use of good and bad practice examples.

But among advisers sometimes it feels like pure guesswork as to whether their business will withstand regulatory scrutiny further down the line.

The regulator is known for being vague both in word and deed, as was shown by the confusion wrought by its independent and restricted definitions post-RDR.

We now have a multitude of labels to describe the different models and services clients can choose from – guidance, robo-advice, low-cost, online, etc. The FCA has also thrown its own terminology into the mix, so we now have advice that can be limited, focused, generic, simplified or regulated. Still with me?

It should not be this complicated to ensure consumers get the advice they need. But it has been made complicated by two indisputable facts: advice is valuable and should be paid for; and not all those who seek or need advice can afford it.

What was already a complex picture is rendered incomprehensible by the backdrop against which advice has to be given, with firms expected to meet escalating costs and serve more people for less money.

Regulated advice has become burdensome to provide, so much so that some big brand companies with the necessary firepower to cater to the mass market are afraid of doing so. The spectre of misselling looms large.

All this has culminated in firms pulling simplified offerings for fear of straying into regulated advice.

There are clients that would be well served by seeing an adviser, and at the moment it is likely they are not being served at all.

There are potential glimmers of hope in amongst all the gloom in the shape of the Financial Advice Market Review, which has the unenviable task of trying to solve all the above. At least this is a tacit acknowledgement from the Government and the regulator that access to advice is an issue they need to resolve.

As any addict knows, the first step on the road to rehabilitation is admitting you have a problem. Policymakers have now made those tentative first steps. But unfortunately the diagnosis is much easier to come by than the cure.

Natalie Holt is editor of Money Marketing. Follow her on Twitter: @Natalie_Holt_MM 



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  1. In see this week Nic has indulged in a bit of day dreaming. May I also?

    One day it will finally sink in to the IFA community (and their journalists) that as far as they are concerned there isn’t an advice gap. The lower end of the market is just not profitable for holistic face to face advice. Piling it high and selling it cheap is the province of the bank assurers and outfits like HL. The smaller guys don’t have the critical mass, nor, if they are wise do they want to trawl in these waters which if you look at the statistics is where most complaints originate.

    Just look at the bare statistics. (Which I have mentioned on previous occasions).
    There are now 4.4 million higher rate taxpayers and just abour 22,000 advisers. You don’t need to be an actuary to see that this equates to 200 potential clients per adviser. I accept that not all might be clients – so halve it. Still plenty to go round. Currently there is £6.8 trillion assets under management. So where on earth is this gap?
    If you mean that there are people who need debt advice and advice on how to build up a cash nest egg then these are not our prospect pool. If you mean that we should seek out people to flog them things they don’t want – only to cease them early – then this is a return to the bad old days.

    So please, when commenting on regulated adviser business remember that these people are now fairly reasonably qualified and some are even very well qualified. They have large expenses and have to stand by their advice (yes advice – not flogging products) for life. So, those to whom you refer as being in this gap are not really our potential client base. That is if we wish to remain solvent and make a living.

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