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ScotLife says another bank will exit advice

Barclays’ exit from the advice market was an act of “brutal segmentation” and at least one more big bank is likely to follow suit, according to Scottish Life.

At the Money Marketing RDR invitational event this week, chief executive John Deane said: “Barclays have done segmentation very clearly. It was brutal. What they are saying is if you are not high-net-worth, do not come to us.”

He questioned if this was where the FSA intended the retail distribution review to take the industry.

He said: “Is this the place we were intended to be? We can debate that but it is actually irrelevant. This is what is happening in the industry now.”

“It is not a realistic proposition for banks so I would expect at least one other major bank this year to withdraw from giving advice in branches except to high-net-worth clients.”

Deane says this will provide business opportunities for advisers as well as increased compet-ition for high-net-worth clients.

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Now why didn’t we think this was going to happen. Perhaps the canaries in the wharf are so engrossed in their own groupthink that they missed the idea that companies work for profit. Except if you are the FSA that is….

  2. Under the oppressive shadow of cost-no-object over-regulation, the provision of advice is rapidly ceasing to be a viable proposition for just about everybody. The banks, insistent as they are on fatter margins than just about everyone else on everything they do are just leading the way to the exit door. Is this the centrepiece of the FSA’s Grand Plan? Before too long, financial services in the UK will consist almost exclusively of NEST, DIY online and HNW fee-payers. To whom will the ordinary MNW man in the street turn for advice on any sort of financial planning advice?

    Never mind ~ the RDR will sort everything out and we’ll all live happily ever after.

  3. Julian, what’s so wrong with your vision of ‘NEST, DIY online and HNW fee-payers’? Surely that’s better than a mix that offers virtually nothing at the bottom of the heap, a poor-quality sales-dressed-as-advice in the middle and high-quality advice for those who can afford it?

    Rather than constantly bleating about how the guys in the middle will be able to afford expensive advice, should we not be improving the quality of appropriately priced models that better match their needs? There are a lot of things that ‘ordinary MNW man in the street’ would like to have but we have to be realistic and admit that spending £1000+ every year on adviser fees is not appropriate.

    Of course, we could preserve a system that encourages poorly qualified individuals to masquerade as financial advisers but that doesn’t actually help anybody.

    Let’s focus on the future and the development of services that are targeted (and priced) to help the man in the street.

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