It has been one of the many broken records doleful industry commentators have replayed again and again since January: banks are leaving the advice market in their droves due to the Retail Distribution Review and mainstream consumers will therefore be left without access to advice.
According to Financial Conduct Authority data published today, we need to change the tune. Adviser numbers in banks and building societies have only fallen by 206 in the seven months from the end of December to the end of July.
That is not a typo; there is no missing zero there. The numbers of advisers with a statement of professional standing to give RDR investment advice is just two hundred and six lower than it was immediately prior to the new rules coming into force.
As of 31 July 2013, there are 4,604 advisers at banks and building societies compared to 4,810 at the end of December 2012. The latest figure is made up of 4,311 fully qualified advisers and 293 partly qualifed advisers.
Looking at the banks that have exited the market either wholly or partially - a list that includes Lloyds Banking Group, Royal Bank of Scotland and Yorkshire and Clydesdale - you’d have imagined that we’d be looking at a number in the hundreds being all that was left in the market.
But perhaps the attrition prediction was always overstated. Lloyds, for example, only said it was going to stop offering advice to low-value clients rather than pull out altogether, while the RBS cut of 615 jobs in its financial planning division was to be offset by the creation of 315 new jobs.
In addition, the restructuring of HSBC’s commercial and retail advice arms saw a net loss of 1,149 roles but an increase in the number of face-to-face advisers by around 300.
While this perhaps gives pause for thought, it does not mean the RDR has not created an ‘advice gap’. Just because the advisers are not disappearing at the rate expected, as the Lloyds example shows that does not mean they are servicing the same clients. Mainstream clients could still be losing their adviser, even if their adviser isn’t losing their job.
The FCA figures revealed that adviser numbers overall have increased by 5.9 per cent since the end of December and currently stand at 32,690.
Inevitably some of the commentariat are suggesting this is due to bank staff retraining to become proper, regulated financial advisers. Andrew Power, lead RDR partner at Deloitte, said the rise in adviser numbers “most likely reflects individuals who previously worked for banks who now work for themselves or IFAs”.
Well, away from banking sector the figures showed the number of individuals with an SPS working at specialist financial advice firms has grown by more than 1,200 from 20,453 at the end of December to 21,684. This is made up of 21,258 fully qualified advisers and 426 partly qualified.
We’ve been saying for a while that the evidence shows specialist financial advisers could be in demand post-RDR - and we’ve not been alone. Perhaps these figures show the word is out that the death of advice has, as it has been a number of times in the past, greatly exaggerated.