The survey was conducted among 203 advisers who use Intelliflo’s Intelligent Office business management software. More than half (56%) of respondents currently accept clients with less than £50,000 available for investment, while over a third say there is no minimum amount before they would accept someone as a client.
One on five (41%) welcome the FAMR review but are concerned that it is being rushed, while more than a quarter (27%) are unhappy at the way the government andthe regulator keep changing the rules about how advisers can run their businesses.
One in six of those surveyed don’t welcome the review at all and think it should be left to commercial businesses to decide what sort of clients they want to attract, and that it is not something the government should get involved with.
“I can see why the government wants to open up advice but the people they are targeting aren’t likely to seek advice, even though they need it,” said Paul Dodd, MD at Paul Dodd Asset Management.
The FAMR review was launched by the government in August 2015 to examine how financial advice could work better for consumers and address the “advice gap”, defined as those who cannot or will not pay for full regulated advice. The result of the review is expected to be announced as part of the 2016 Budget in March 2016.
Key issues in the FAMR proposals include what robo-advice, or digital simplified advice, can and cannot deliver; a return to commission-based products, and how “advice” and “guidance” are delivered.
Regarding speculation that regulations around commission for investment products may be relaxed to help open up the advice channel for the less wealthy, reaction was mixed. More than a third (36%) thought it may be a good idea, but it would depend on which products it relates to and how it has to be implemented.
Just over a quarter (27%) of the advisers who took part in the survey said they thought it was a bad idea for commission to be reintroduced and would be a backward step for the image of advisers.
Nearly one in 10 thought it was a very good idea, while around a quarter (23%) said they were unconvinced the reintroduction of commission would be in the best interests of consumers.
Overall, only a third said they would be prepared to adapt their business model to provide investment services to people with relatively low amounts to invest.
Close to one in five would not be prepared to adapt their business, with the majority (44%) open to consider adapting depending on the outcome of the review.
“I would consider adapting if the review creates opportunities for offering advice to people with less than £50,000 to invest in a profitable way. Robo-advice is interesting, as is the ability to charge commission for certain products,” said Peter Harrington, director at Hodge Bakshi Financial Services.
