Old Mutual Wealth director Steven Levin says:
“There will be huge benefits for the future prosperity of UK consumers if the Government and financial services industry can work together to create a legislative environment that allows financial planning firms to grow while also encouraging consumers to explore the advantages of taking financial advice.
"According to research conducted in July*, 63% of advisers think it has become harder to be a financial adviser since the Retail Distribution Review was introduced and the vast majority (75%) say the primary reason is the increasing cost of regulation. As a result, just under half (49%) of financial advisers have had to turn away clients looking to access the pension freedoms because it is uneconomical to service them.
"This advice gap is also reflected in consumer research, conducted in partnership with YouGov**. The figures show cost is the main factor that discourages people from getting financial advice, with 37% of people citing it as a barrier and 31% fearing that they may pay for something that they don’t need.
"We must make sure advice is accessible but we cannot take professional financial advisers for granted. Financial advice is a tightly regulated profession and advisers are subject to rigorous qualification standards in order to ensure that consumers can depend upon the financial advice they receive being of the highest quality.
"Unfortunately, few people recognise this. Among those who have not previously taken financial advice, 44% say they are not prepared to pay for advice, a third (33%) say they aren’t sure what kind of fee is appropriate and 15% said they would not be prepared to pay more than £250**.
"Advice does not have to be prohibitively expensive, even for those with modest wealth, but it is important we address this gap in expectations and that people recognise the value of financial advice, not merely the cost.
"For this review to be a success the FCA must engage closely with advisers as well as consumers. Where it is uneconomical for financial planners to advise consumers the cause must be examined and a solution found.”
*Old Mutual Wealth Adviser Insight Survey conducted in July 2015 with 251 UK financial advisers.
**Old Mutual Wealth Attitudes to Advice survey conducted with YouGov in July 2015 with 1425 consumers age 35+