Richard Dunbabin (pictured), CEO at Ascot Lloyd, comments on the FCA’s Financial Advice Market Review consultation…
The unaffordability of financial advice is often identified as an unintended consequence of the RDR. While the RDR has been a significant driving force in the widening ‘advice gap’, the industry needs to deliver more flexible solutions that cater specifically for individuals’ advice requirements.
The need for advice normally increases in line with age and investment values. The financial needs of younger clients with lower savings and pension values significantly differ and they may not always get best value for money in respect of the fees required for access to a full adviser service proposition.
Restricted advice offerings are often difficult to understand in comparison to more transparent IFA charging structures. As a result, having a large number of different charging models to pick from does not make it easy for clients to assess the real cost difference between restricted and independent advice. IFAs can offer better alternatives including access to a fully independent investment proposition at a lower fee rate, tailored so the client receives the appropriate amount of face to face advice which fits their portfolio needs and the fees they expect to pay.
The FCA’s consultation highlights a critical need for a wide range of flexible financial advice propositions, from the highly bespoke to the digitally versatile, on an independent basis. In the face of a growing restricted advice market, IFAs must continue to grow their businesses in order to extend the provision of independent financial advice to clients across the UK.