Personal Finance Society chief executive Keith Richards says advisers need to consider whether they are “driving consumers to the wrong place” by turning down would-be clients with less to invest.
Speaking to Money Marketing last week at the PFS annual conference in Birmingham, Richards said the RDR had not caused the level of market disruption that had been expected, and that consumers seemed to responding to the reforms positively.
But he pointed out that while advisers continue to serve existing clients, they are choosing not to advise people with fewer assets.
He said: “With new clients, we are hearing that the RDR rules are having some impact with advisers becoming more selective. We are seeing some turning away of customers who are below a certain asset value. That is much lower than predicted but it is likely to grow over time. That compounds the advice gap problem.
“The growing concern for many is while there is a prediction that self-serve solutions will become more popular, that exposes consumers to much greater risk, because without being appropriately qualified and understanding the treatment of tax, a consumer could be making a catastrophic mistake with their finances.
“So we have a responsibility to consider whether we are driving consumers to the wrong place. If you have got a risk averse client, actually self-serve can be extremely high risk.”
On the issue of independence, Richards there is still a lot of “noise” about whether firms were complying with the FCA’s definition. But he said the bigger challenge is getting clients to understand advice labels.