Talking at an RDR roundtable hosted by Portfolio Adviser, industry participants were adamant the mass market, also referred to as “the 95%”, which have been deemed unadvisable from a commercial reality stand-point, should not be abandoned.
But not all were convinced RDR would herald the end of advice for those with small lump sums to invest.
Using a report from JPMorgan Asset Management titled “Winning propositions: the consumer market post RDR”, as a starting point, the roundtable delegates discussed whether households earning £50,000 would truly represent the “critical threshold” for those willing to pay for advice in the fee-based landscape post-RDR.
Jasper Berens, managing director, head of UK retail at JPMorgan Asset Management, said there would be a lack of accessible and affordable financial advice because the banks who were expected to pick up this segment of the market had systematically taken themselves out of it.
Lee Robertson, chief executive officer at Investment Quorum, agreed with this and questioned why the government insisted on following policies that restricted access to “any form of financial advice” when the savings gap continues to grow.
“The state is transferring pretty complex financial decisions to the public and these are the very people who need the advice since most wealthy people self-select and look for advice as and when they need it.”
But not everybody thinks the mass market will be abandoned. David Cowell, chief executive and founder of discretionary manager Myddleton Croft, said: “I know at least a couple of entrants looking at this market, one of which is looking to offer advice through the work place. The industry has not appointed, it is at the point of introducing innovations to reach this market.”
There may be a gap while businesses work out how to make it commercially viable, however, which is the ultimate reason the banks have pulled out.