Set to reignite the debate around the advice ‘gap’, the review – a joint venture by the Financial Conduct Authority and the Treasury – could ring some significant changes within the industry upon its publication in 2016.
While the consultation is multi-faceted in its focus, the overriding question posed is simple: is there a viable middle ground between mass-marketed ‘robo’ solutions and tailored high-net-worth-centric service in this post-RDR world?
“In regulatory terms, financial advice has become a binary proposition,” said Tom McPhail, head of retirement policy at Hargreaves Lansdown.
“It has to be either full, personalised advice, which is too costly for many people, or not exist at all. There is no middle ground, which is often what people want and need. Many consumers just want a bit of help, and we believe policymakers should be focusing on this ‘third way’.”
The fact that two-thirds of wealth managers only accept clients with at least £500,000 to invest suggests that the industry does not think so.
“The current FCA advice review is going to be quite far-reaching and there could potentially be a lot of change around how firms deal with smaller clients,” said Nigel Stockton, Bellpenny CEO. “We are going to be looked at and told that we have to be able to give everyone advice.
“Can we afford to have an adviser sit down for two-and-a-half hours and do a full fact-find with a guy who has £30,000 to invest? No – it is going to take some thought as to how we are going to handle that. Client costs and regulatory oversight costs have become so expensive compared to what they were that you need to have scale and spread those costs.”
However, as some clamour for a solution that amounts to almost a ‘bespoke-robo’ crossover proposition, Lee Goggins, founder of findawealthmanager.com, believes that, for the most part, ‘robo’ advice has changed the industry for the better.
