Prudential and Aviva have clashed over the importance of simplified advice ahead of the RDR.
Prudential UK chief executive Rob Devey says simplified advice is needed to allow providers and advisers to serve the mass market. He says: “I do not know how we will serve the mass market without some clarity on simplified advice. Where we lose advisers from the industry as a result of the RDR, it will be from that mass-market area. There is a group of people in the middle who simply will not be able to afford to pay up front for advice.
“We do not have a solution yet but we need simplified advice alongside things such as the Money Advice Service and simple products to help people make the right decisions.”
Last week, Aviva UK Life chief executive David Barral told Money Marketing the firm has no plans to offer simplified advice and is instead developing a non-advised financial guidance service for customers with limited budgets after the RDR.
He said: “I am not a fan of the concept of simplified advice. I think you either get advice or you do not. Aviva is not waiting on any further clarification from anyone on simplified advice.
“There are a proportion of customers who will be unwilling to pay for full-fat advice but still need some kind of help and guidance and we think there is an opportunity there.”
Last week, Prudential’s UK arm reported a 9 per cent fall in operating profits on an EEV basis from £982m to £893m in 2011 as annuity sales fell. Annuity Direct business development director Katherine Oxenham says: “I agree with Aviva on this. I think we need to be clear and say the services we offer are either advised or non-advised. Having simplified advice somewhere in bet-ween will muddy the waters for customers.”