OpinionAug 22 2013

Nothing is holding back advice sector more than fear itself

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I was at the Pims conference a few years ago when a catering convention was running on the boat at the same time. Some of their delegates wandered into a finance presentation by mistake and settled at the back. They were oblivious, happily nodding along in agreement as the talk went about slating the FSA. It was probably half an hour before they realised the speaker was talking about the Financial Services Authority rather than the Food Standards Agency and they sheepishly slipped out.

If not the regulator, advisers are keen to highlight several other annoyances chipping away at their daily professional life. The Money Advice Service is a pain. Hopelessly inadequate and you are expected to fund it, but it is no more a threat to your business than the Citizens’ Advice Bureau has been historically. (Continues on next page)

I have even seen some advisers suggest the idea of financial education in schools could undermine their offering – why would someone visit an adviser if they already know about money? This is ridiculous. I can add up but would still use an accountant.

And sure enough, in the build-up to the RDR, many in the advice world were vociferously predicting the death of their businesses. There was talk of increased qualifications and hoop-jumping exercises, less wealthy clients who would no longer offer viable revenues while those clients who were worth keeping would be scared off by the prospect of having to pay for advice that was previously perceived (incorrectly) to be free.

But, in the same way flying should not be as scary as it is, there are reports that advisers are seeing an uplift in business despite all these fears. The FCA recently announced an increase in the number of advisers in the UK, from 31,132 at the start of the year, to 32,690 in July. A 5 per cent increase is significant enough in itself, but set against forecasts of advisers abandoning the profession in their droves, it is a remarkable figure.

This was followed by research from adviser rating website VouchedFor, which claims that these burgeoning numbers of advisers are even enjoying greater business levels in the post-RDR world. Its survey found that 97 per cent of responding advisers said they had taken on new clients since the regime was introduced. What’s more, 85 per cent said they had not lost a single client and with just one exception, those that had lost clients blamed non-RDR related factors.

It is hard to argue with VouchedFor’s conclusion that “the predicted migration from independent advice simply has not occurred”.