Both the regulator and the government are trying to address the so-called ‘advice gap’, according to Keith Richards, who said that in 2014 it was acknowledged that the need for professional advice is stronger than ever.
Speaking to FTAdviser, the Personal Finance Society’s chief executive said that providing evidence of this need were statistics which showed two-thirds of adult consumers would benefit from a financial planning review, whether at the start of their working careers, approaching retirement, or even in retirement.
“Worryingly, an equal two-thirds of the population have never received advice. Clearly that’s a gulf that needs to be bridged.”
He added that there were also signs this year that the “gap has been accepted and tackled”, stating that as well as advisers doing their bit, the Financial Conduct Authority seems to have adopted a “more collaborative and balanced approach”.
In particular, the regulator launched Project Innovate this year, which it is hoped will catalyse the development of simplified advice models for mainstream consumers, amongst other things. The Innovation Hub, launched in October, will provide direct support from a team of dedicated FCA staff to both regulated and non-regulated innovators.
Since Mr Richards spoke to FTAdviser, a report was published by Towers Watson, on behalf of the regulator, which dismissed suggestions of an advice gap prompted by the RDR and suggested there were actually 5,000 too many advisers in the market.
It did, however, add changes prompted by the new rules could be disenfranchising mainstream consumers.
Modelling work based almost entirely on FCA data relating to advice demand and adviser numbers, suggested there was a need for a little more than 25,000 financial advisers. The latest regulatory data shows there are more than 31,000 individuals qualified to deliver advice.
Mr Richards emphasised that the government has also followed suit with the radical pension changes that were announced this year, which recognised the “vital role” that financial advisers have to play in guiding the public to take more responsibility for their own financial well-being.
He said: “All in all, there is increasing recognition from a number of quarters of the importance of professional financial advice in the future landscape.
“The pension reforms announced in the Budget confirm a government expectation that an increasing number of UK consumers will be seeking the appropriate advice in order to take advantage of the new freedom on offer.”
From a PFS perspective, Mr Richards cited a new record membership level reached during 2014 of more than 35,000 individuals, while the number of financial planners achieving Chartered status rose from 3,500 to more than 4,300.
There was similarly encouraging news on the corporate Chartered front too, with the number of chartered financial planning firms passing the 600-mark for the first time.
He added: “We [also] launched new consumer confidence and united profession campaigns, a new consumer website, the first ‘accredited’ adviser directory and a comprehensively revised professional development programme.”