The Personal Finance Society’s chief executive said that the future looks more promising for the financial advice community than it has done for many years.
After years away, Mr Richards said big businesses would return to the financial advice market. His comments came after the likes of LV, Fidelity and Blackrock all dipped their toes into the robo-advice market this year.
He said advisers should expect ‘robo-advice’ and ‘safe harbour’ to become buzzwords in the new year, as these terms are already stimulating the debate about increased access to advice.
“There is no doubt that technology will continue to play an ever-greater role in the advice process, and I believe it complements, rather than threatens regulated advice. However, there remains a great deal to discuss about the concept.
“You can’t automate such critical systems without running the risk of it developing into another mis-selling scandal. That being said, the development of simplified advice with a bias towards technology should be possible – without increasing the risk or burden on advisers.”
On the subject of the Financial Advice Market Review, the outcome of which is expected to be announced by the chancellor in April, Mr Richards said it is possible that we will see much-needed regulatory reforms to support increased access to regulated advice.
The FAMR has seen the Financial Conduct Authority and HM Treasury tasked with discovering what puts the industry off offering financial advice.
An input paper published by the FCA and HM Treasury in October stated in 2007, two-thirds of retail investment products were sold with professional advice. However, in recent years, the FCA reported a decline in the number of financial advisers offering professional advice - from around 26,000 in 2011 to 24,000 in 2014.
A number of major providers have cut back their professional advisory businesses, or left the market, the regulator stated, while the remaining advisers have increasingly focussed on high net worth individuals.
Mr Richards said that advisers will clearly want to see whether or not the FAMR will address what many view as unsustainable regulatory costs and if there are alternative funding solutions introduced for the Financial Services Compensation Scheme in particular.
Back in October Intrinsic wrote to about 1,000 members stating the company had expected the cost of the FSCS levy to be £2.2m in 2015 – but it received a bill for £5.5m.
The PFS wrote to the chancellor back in July about alternative funding requirements and proposed the reintroduction of a long-stop.