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Liability worries hinder adviser mass-market plans

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Just 8 per cent of financial advisers are planning new services for mass-market consumers in 2016, according to Sesame Bankhall.

In a survey of 222 financial advisers, Sesame found the overwhelming majority who are not intending to launch new services for lower wealth customers blame liability issues.

Some 94 per cent say there needs to be a reduction in liability for “simpler” advice scenarios, coupled with greater regulatory clarity.

Similarly, 87 per cent say that business costs need to reduce, while 57 per cent say advice costs need to be supported by either employers or the Government.

Over half (56 per cent) say a suite of kite-marked products needs to be developed for the mass market.

However, there are signs of a willingness to meet lower income customers, with over half of advisers agreeing that if those barriers were addressed, they would be interested in offering a service.

Sesame Bankhall executive chairman John Cowan says: “The simple reality is that in the current market financial advice is geared towards those consumers who understand the benefits of financial advice, and are willing and able to pay for it.

“Financial advisory firms can play an important role in helping to bridge the advice gap, but in order to have the confidence to implement solutions which serve the mass market greater innovation is required.”

The findings come after Money Marketing revealed the Financial Advice Market Review advisory panel is considering radical changes which could see the return of commission and a lower qualification bar for advisers recommending basic products.

Last week, FCA acting chief executive Tracey McDermott confirmed the regulator is considering reintroducing some form of commission but insisted it would not reverse the RDR.

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Comments

There is one comment at the moment, we would love to hear your opinion too.

  1. Providing advice to the mass market is and will continue to be a real challenge. The requirement to assess investor suitability does not diminish and so the liability for getting it wrong remains.

    In reality, RDR has forced advice firms to focus on clients where there’s a return for the time spent giving professional advice and resulting associated risk. Dumbing down the advice and suitability process for the mass market is not the answer and I’m not sure that robo-advice is the answer to the mass market challenge.

    What is required is a radical re-think and approach to the challenge and it’s one that the regulator should not lead on. After decades of governments encouraging consumers to spend, re-mortgage and spend more in order to support a consumer led economy and the exchequer through tax revenue, surely the government could demonstrate some informed leadership on this. I shan’t hold my breath on this one though.

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