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Kim North: Who will satisfy the demand for advice?

Demand for advice is on the rise and every effort must be made to recruit more people into our industry. Not only are we set to face a busy period for investment advice in the run-up to Brexit, and in light of increasing trade wars and market volatility, but the demand for pension transfer advice continues unabated.

Indeed, the average cash value of a defined benefit transfer at the end of March was £235,000 and the rule that financial advice must be provided for any transfer above £30,000 remains in place.

On top of this, more than 23 million employees are now expected to work beyond the age of 65, with many admitting they need to continue to earn a wage due to insufficient pension savings, according to Canada Life. Auto-enrolment has pushed millions into thinking more seriously about financial planning for the future, many for the first time.

And then there is a, perhaps surprising, growing demand for mortgage advice too. Indeed, according to the Intermediary Mortgage Lenders Association, the proportion of UK mortgage applications that progressed to an offer reached a three-year high in the first quarter of this year.

The mortgage product world has also been heating up, with Deutsche Bank only very recently entering the market with multi-currency residential mortgages for the rich, and Santander the latest player to add a 10-year fixed-rate mortgage to its range.

Both these products need advice – the first for eligibility and the second to explain the risks associated.

With the latest FCA data showing there are 5,270 regulated advice firms with close to 30,000 advisers, there are simply not enough to go around.

We know the bank brands have a stronger appeal than the independent advice brands, so it is not surprising to see them take steps back into the world of advice, poaching the millions not tolerant to adviser charging.

But we also all know what it is like nowadays to walk into vast banking halls with nothing in sight but an array of machines.

This is sadly not conducive to the friendly face-to-face service traditional advisers can offer.

Thankfully, according to the latest FCA data, the number of advisers at banks and building societies has decreased, from 3,525 in the last year to 3,374. Hopefully, this will be a trend that will continue.

The main regulated activity for advisers is answering the two questions: what should I invest in and who should provide the product?

But the real basis of financial planning is ensuring people are able to live in the home they want debt-free, with a reasonable standard of living both in sickness and health.

Machines will no doubt be able to provide personalised advice that hits the regulator’s ever-changing conduct-of-business rules at some point in the future, but certainly not in my lifetime.

In the meantime, traditional advisers must keep hold of the mantle.

Kim North is managing director at Technology & Technical

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