The survey, which reflects the views of 222 financial advisers, also revealed that 91% of respondents believe the government should do more to highlight the benefits to consumers of seeking professional financial advice.
For those firms that do not intend to provide a mass market solution for lower wealth / lower income consumers over the next 12 months, SBG’s research reveals what – from an adviser’s perspective – will need to change to enable them to reach this segment of the population:
- 94% say there needs to be a reduction in liability to reflect ‘simpler’ advice scenarios, coupled with greater regulatory clarity;
- 87% say business costs need to reduce;
- 57% believe advice costs need to be supported and funded from elsewhere, such as employers or government;
- 56% say a suite of kite marked products needs to be developed for these consumers.
Over half of advisers (54%) agreed that if the barriers were addressed and an appropriate and cost-effective solution was created for lower wealth / lower income consumers then they would be interested in offering this service.
John Cowan, Executive Chairman at Sesame Bankhall Group, commented:
Advisers want to reach out and help more people, but the challenge our profession faces is how to do that in a sustainable and cost effective way. In the past many advisers provided advice on a ‘loss leader’ basis, with a view to securing potential future business from their clients. However, various factors and the RDR particularly, have brought into sharp focus the costs of running an advisory business. This means firms are less likely to make concessions in order to compete for or secure new business from lower income and lower wealth consumers.
The simple reality is that in the current market financial advice is geared towards those consumers who understand the benefits of financial advice, and are willing and able to pay for it. Financial advisory firms can play an important role in helping to bridge the advice gap, but in order to have the confidence to implement solutions which serve the mass market greater innovation is required.
In addition, whilst there has been a great deal of focus on advice in the at-retirement market following the pension reforms, we also received strong feedback from financial advisers that, at a time of rising household debt, more needs to be done to promote the benefits to consumers of protection solutions in order to help people look after the financial wellbeing of themselves and their family.