New research published by the Association of Professional Financial Advisers (APFA) has uncovered a strong need for lower cost advice options to ensure greater access to advice for consumers.
APFA is again calling on the regulator to better facilitate the industry’s efforts to offer lower cost services by reducing regulatory costs, and by clarifying guidance on simplified advice.
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Following figures published by APFA in 2013, new research carried out for them by NMG Consulting reveals that over half of advisers (54%) turned at least one client away last year. Almost four in ten (37%) of those say they did so because the client’s requirements did not justify the cost of the service.
Chris Hannant, Director General at APFA, said:
"The number of advisers turning at least one client away is a concern. Financial advice provides plays a vital part in the decisions made by millions of people but these figures suggest that for some, cost is a barrier to that process. The issue is even more pressing given the recent Budget announcement, stipulating that financial advice needs to be available to everyone entering retirement. This poses an important question for the profession: How will it provide a viable but lower cost option to enable greater numbers of people to use professional financial advice?"
APFA’s research points to potential solutions. One in five advisers (21%) said they offer simplified advice, and more than half of advisers (51%) said they will use low cost channels – such as web and telephone – to deliver simplified advice, in combination with face-to-face meetings.
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By GlobalDataChris Hannant added:
"The industry is being resourceful in exploring ways it can deliver advice to a broader market, but we also need to see the regulator doing everything it can to streamline bureaucracy, so that the cost to advisers of giving advice is minimised. This has been a key driver of our regulatory dividend campaign.
"The recent proposals to simplify RMAR reporting are a welcome step in the right direction, but we need to see more. For example, we think the FCA should also overhaul its allocation of fees. The current system is cumbersome and doesn’t reflect the risks the FCA is trying to manage.
"We also need greater clarity on what the FCA means by simplified advice ñ and whether the focus should in fact be on focused advice."
