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Tech will boost restricted reach

Industry consultant John Cowan predicts product providers will develop new technology to enable restricted advisers to service the mass market.

At the Money Marketing RDR Invitational in London last week, Cowan said this will lead more advisers to become restricted. He said: “Restricted advice will grow as providers, particularly, offer new technologies and industrialised processes to help the distribution community service clients.”

Concerns have been raised across the industry that the RDR will restrict the mass market’s access to advice but Cowan believes the regulator will be “relaxed” about manufacturers helping fill the gap.

He says: “The challenge for the regulator is how the mass market is going to be served. It must be panicking about the banks pulling out of the advice market, so I think it will be quite relaxed about manufacturers offering these services.”

Yellowtail Financial Planning managing director Dennis Hall said his firm will not be offering a restricted service but he agreed restricted advice will be popular.

He said: “There will be a demand for advice in the mass market and someone has to fill it. If independent advisers cannot do that because of the costs involved it will have to be done with a restricted business model that is profitable.”

Baigrie Davies director Ian Howe warned that if providers are able to offer their own restricted advice propositions in a way that is profitable, they are likely to take market share from IFAs.

He said: “Providers will be able to engage with those customers from a very young age and therefore brand loyalty will be a challenge for our industry.”

An FSA spokeswoman says: “It is not for us to say what the industry should look like as long as the advice being given comes up to the standards we set out.”

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