A new report on the impact of the RDR on the financial advice market, from the Association of Professional Financial Advisers (APFA), reveals that non-advised sales grew last year to account for half of all financial products sold.
At the same time, the second annual The Financial Adviser Market: In Numbers report also shows that advice firms performed reasonably well in 2013, with a year-on-year increase in profits.
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Overall, the number of advising staff working at financial adviser firms fell from 23,865 in 2012 to 22,790 in 2013. Aggregate revenue increased by 1% but with the fall in overall advisers, this equates to a greater increase in revenue per adviser.
At the same time, however, the proportion of financial products sold on an advised and non-advised basis across all firm types in 2012/13 reached level pegging for the first time.
Chris Hannant, director general at APFA, said: "This report provides a snapshot of year one of the RDR, and the rise in non-advised sales is one of the standout findings. It demonstrates the need for a level playing field for financial advice. The Financial Services Consumer Panel’s report last year flagged that non advised products were causing confusion around pricing and protection, which ultimately leads to consumer detriment. We need greater clarity from the FCA on this, and await the findings of their thematic review into advised and non-advised sales.
"The advice industry has performed well, though, with retained profits up on 2012. Significantly though, they are still down almost a fifth on the level recorded in 2010 – the year the FCA used as a benchmark to justify the increase in the FSCS threshold. Profits across the industry have actually been lower in all of the past three years since then. The regulator needs to look again at affordability for levies, and whether the FSCS threshold level is appropriate."
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