Advisers have reported an average increase in income of 5 per cent since the implementation of the Retail Distribution Review, the Financial Conduct Authority has revealed, as it responded to claims that lower-value clients are being increasingly turned away by advisers.
The regulator told FTAdviser that advisers numbers had risen since reaching a nadir of around 31,000 immediately before RDR implementation, and that research carried out by NMG found adviser fee income had risen and a majority of clients are not put off by post-RDR fees.
The comments comes in response to a statement from the Association of Professional Financial Advisers, which said their own research from NMG found the RDR had priced 60,000 clients out of the advice market.
No pre-RDR figures were supplied for comparison, but Apfa said the numbers emphasised the advice gap and reinforced arguements that regulatory fees should be lowered for advisers to prevent the pricing out of smaller clients.
A spokesperson for the FCA said: “We don’t recognise the industry that Apfa is describing. We know that adviser numbers have actually risen since RDR came into effect. Recent research from NMG has shown that advisers have seen, on average, a 5% increase in income in 2013.
“The same research also found that the vast majority of consumers with assets to invest, even relatively small amounts, were comfortable with paying fees in line with those charged by leading firms in the industry.
“It is only a year since RDR came into effect. The reforms were major and were always going to result in change. We have committed to thorough research into the effects of RDR.”
Chris Hannant, director general of Apfa, said: “As a result of the implementation of RDR financial advice firms are more focussed on costs.
“Clients’ fees need to reflect the cost of providing the service, while at the same time RDR has added to the operating cost of firms due to the resource needed to comply with the new rules. As a result advice is now less viable for some.”
