The founder of online advisory community PanaceaAdviser has said anyone seeking to join the industry in this expensive, post-RDR age was exhibiting the “exuberance of youth” and should be discouraged.
He said: “It is right to put a reality check in place for young gun entrepreneurs who may have been thinking this was a great idea for them to pursue today.
“Financial services regulation today has sounded the death knell for any directly regulated little guy fulfilling his or her dream of starting their own, small financial advisory firm.”
He said that anyone starting from absolute scratch needed to take a good hard look at the costs.
Mr Bradley highlighted the matter of authorisation costs: on top of the £1500 application fee, a further £3000 could be spent on help getting authorised. Also, to set up as an incorporated business, advisers need to prove capital adequacy, changing soon from £10,000 to £20,000.
On top of this, further costs would be incurred, such as professional indemnity insurance; an office; a compliance consultant; regulatory fees and levies; and the cost of websites.
Mr Bradley added: “The FCA has recently been trumpeting the fact that adviser numbers have gone up since RDR and the industry should as a result rejoice. But all may not be as rosy as the FCA may suggest.”
Lisa Winnard, director of Sesame Bankhall Group’s Financial Adviser School, said: “Studying to qualify in any profession is never easy, but FAS has been impressed by the amount of industry research undertaken by candidates as part of their application.
“They understand what it takes to become qualified and competent, along with the challenges of entering such a professional and accountable industry. The FAS programme is structured to provide in-depth support in these areas, which ensures that our prospective advisers aren’t taking on these challenges alone.”