OpinionAug 7 2013

Come on, admit it: post-RDR life is rosy

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C’mon, tell me before you go off and enjoy your well-earned holiday in your second home in the glorious Provence sun. How is life shaping up as an independent financial adviser, financial planner or paraplanner in the new world, post-RDR?

Hunky-dory? I would not be surprised if that was your answer. I bet you will literally skip over the Channel in delight at how business is developing now the economy is grudgingly moving out of recession – and the regulator is largely off your back.

My rosy view of an independent financial adviser’s life in the post-RDR world is based in part on personal contact with advisers and on fact (yes, I know, facts and journalists do not always go well together).

You might not believe it but I do speak to a number of you (some I even class as friends) on a regular basis and all seems pretty good with the world. According to my adviser contacts, there is plenty of money still out there waiting to be invested and lots of people searching for quality financial advice.

Given the big banks have all but given up (thank goodness, I hear you murmur) providing ‘advice’ through their branches, there is only really one destination for them: the offices of a trusty independent or restricted financial adviser. And advisers are enjoying a boom.

There is plenty of research around to back this up, although it does come from those who have a vested interest in promoting the virtues of independent financial advice (I say that only to protect myself from those who think I am talking up the sector).

The latest figures from unbiased.co.uk, the online directory of professional services, indicated strong demand for advice. In the first half of this year, it said more than a quarter of a million adults (258,062 to be precise) visited its site in search of a financial adviser. This represented a near 10 per cent increase on the equivalent figure for the first six months of last year when 235,243 used the site to go advice hunting. About half of those consumers who searched, said the site’s boss Karen Barrett, went on to meet an adviser.

“For the past decade, we’ve consistently seen between 400,000 and 500,000 advice searches a year,” said Ms Barrett. “The credit crunch saw a tail off in demand but it’s picking up again.” She believed more than 500,000 searches would be carried out before the calendar year was out.

Research conducted by financial giant Axa Wealth backed up this renewed thirst for advice. It said that nearly one in five consumers who had never sought advice before now intended to seek it out.

“Financial planning has never been so crucial,” said Axa Wealth’s Paul Riddell. Given the complexity of the taxation world, the pensions system (state and private) and the bewildering array of products available for consumers to choose from, he is dead right.

Complementing Axa Wealth’s work, Standard Life suggested an ‘adviser gap’ was emerging as the demand for advice from the baby boomer generation outstripped the supply of advisers available to help them. It estimated there were nearly 5m people aged 45 or more with more than £100,000 of financial wealth. Many of these people, it said, would turn to a financial adviser in the near future.

Adviser-rating website vouchedfor.co.uk indicated that many of its reviewers (31 per cent) had less than £50,000 of savings and investments, thereby denting the belief that advice would only be accessible to the wealthy. It seems, in a post RDR world, that independent financial advice is very much alive and kicking.

Even the regulator, it seems, is cautiously content with the progress financial advisers have made since the start of the year to up their game. Of course, it will never ever be totally happy – it wants advisers to be more transparent over charges and be explicit about whether they are independent or restricted – but it is reassuring to hear the FCA acknowledge the fact that most advisers have shown a “willingness to adapt to the new rules”.

In a perfect world, all independent financial advisers should be charging fees rather than being remunerated according to a percentage of funds under their stewardship. But we do not live in a perfect world.

So you good independent financial advisers. Well done for surviving and thriving post-RDR. Enjoy your summer breaks. Come back refreshed from Provence and keep on demonstrating that at a time when distrust in financial services is at rock bottom, you represent a beacon of financial light.

Jeff Prestridge is personal finance editor of the Mail on Sunday

In a perfect world, all independent financial advisers should be charging fees rather than being remunerated by a percentage of funds Jeff Prestridge

You said

rdonal6116 in response to Kevin O’Donnell’s column on the shortage of financial advisers

There is no doubt there is a shortage of advisers and many that need our advice are not prepared to pay fees. Gone are the days of cross subsidies and dealing with clients who bring in the ‘bag of policies’ for you to sort out for nothing on the off chance you might get a sale. With costs rising (not falling as was predicted under the RDR), no adviser is going to do something for nothing. All work must be paid for. It is likely that firms such as SJP will be the winners from the RDR and we wait and see how many other companies will mimic what they do.