To paraphrase the tagline used to promote the excellent 1993 Bill Murray comedy vehicle Groundhog Day; the regulator is enduring the worst unintended consequence of the Retail Distribution Review... over and over again.
Yes, just three days into the second year since the RDR was introduced and we’re already running headlines highlighting the ‘advice gap’ the rule changes are believed to have exacerbated for lower-value clients.
It’s like January 2013 all over again. Many in the adviser sector displayed considerably more prescience than the Financial Conduct Authority or its predecessor and had been warning about this for two years or more even by then.
But rather than repeating the gloom that has characterised this phrase in the past, this morning we brought some New Year cheer as we reported on a service that has been developed to bridge the gap - and with a proper advice offering.
IFA Proactive Financial Management has launched a new authorised representative that will engage with customers online, offering a simplified process that substitutes costly and time-consuming face-to-face meetings with virtual contact channels and a range of online tools.
Monibox is a model portfolio-based restricted advice offering that retains the essence of advice in the form of a tailored personal recommendation, but that will set clients back just £300 a year paid as a flat fee.
I’ve long believed that there exists a market in the advice gap for innovative intermediaries and it is models such as this that could point to a future for client interaction that does not rely on potentially harmful self-direction.
Don’t get me wrong, the non-advised services that many have launched have their place. But I also think the Financial Services Consumer Panel’s recent damning report on their use in the annuities market, which warned of bumper hidden commissions, inappropriate product bias and potential client detriment, could be instructive on a wider basis.
It took the watchdog a long time to accept that a gap even existed - it hadn’t even modelled for the effects of the move to fees on access to advice for small-pot clients at the time the RDR was implemented.
FCA chief executive Martin Wheatley finally acknowledged what others had long prophesied in September last year, when he admitted to the Treasury Select Committee there was concern within Canary Towers that the move to fees and the exit of a number of advisers, and particularly banks, from the sector would disproportionately hit so-called lower-value clients.
Since then the evidence has mounted: separate studies published in December revealed that 14 per cent of advisers may have turfed out existing clients they feel are no longer viable, with as many as 60,000 consumers potentially being left without recourse to an adviser.
Both studies, among others last year, set a threshold of around £50,000 below which advice fees are difficult to justify or simply off-putting to prospective advice-seekers.