So, how do those who wish to occupy this advice space deliver it without asking for a sizeable fee up front? The answer is probably a recovery of the fee from the regular premiums as opposed to these clients being asked to write cheques upfront.
I tend to be in agreement here with Keith Richards, the chief executive officer of the Personal Finance Society. He has suggested some form of ‘client-agreed advice fee’ that would be lower cost than full financial advice and cover some form of simplified regulated advice package.
This would definitely increase the payment options for the public to pay for limited or basic advice, could be implemented without any change or conflict arising within the RDR Conduct of Business rules and would not be indemnified commissions which got us all into such a muddle a few years back. Some of the vertically integrated models are pretty much here already so it should not be too hard to broaden this out.
So, back to the banks. While I am not a huge fan of their past forays into retail financial advice it is surely true that only they really have the reach, the brand familiarity and the depth of pockets to address the savings gap. Already we are seeing some cautiously re-entering the advice space and some are talking about automated or robo-advice to serve this segment.
If the regulator keeps a close eye on the way businesses operate, charge and reward their staff, then we might begin to close the advice gap – which got so much worse, unwittingly or not, with the introduction of the RDR.
