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What banks returning to advice means for your industry

What banks returning to advice means for your industry

Industry figures have predicted there will be a host of new blood coming to the independent financial advice industry this year as a result of the large banks moving back into the advice arena.

Earlier this month, Santander UK stated from March it will once again offer branch-based investment advice.

Similarly, the Royal Bank of Scotland is set to augment its mass market retail investment advice this year, the bank confirmed to FTAdviser.

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Now, a number of industry spokespeople have voiced the belief that the recent moves by the two banks - which may encourage other large banks to follow suit - could be the start of a wave of new blood coming into the advice space.

Brian Spence, managing partner at London-based consultancy Harrison Spence, said the influx of new blood would be a result of the law of unintended consequences.

He said one of the disadvantages of the regulatory environment is there are very few new entrants into the market place.

“As people have pulled out, the bancassurers have pulled out, the life offices and the brokers and the systems that encouraged new entrants into the market place disappeared, which has meant that for the last five years there have been very few entrants into the market.

“The law of unintended consequences of this new move to pull the bancassurers back into the market place means it is fantastic for the country, it is fantastic for the financial services industry and it is fantastic for people.”

He added it was his belief that if the banks come back into the sector then the universities will start to produce courses which will allow graduates to come out with a level four qualification, which will enable them to work with the banks and bancassurers.

“The reality is that when the financial adviser working as a bancassurer gets fed up of just selling a product they’ll look to get into independent financial advice because they’ll realise that is giving holistic financial advice.

“They will realise what they are doing is limited. (It) is good because it is selling a product that people need, but it is limiting for their career and they will move into the IFA sector.

“So all of a sudden the IFAs who can’t get for love or money new graduates through are going to find there will be a lot of new blood who are ready with some experience to retrain.”

Mr Spence added technology would help an awful lot and that robo-advice is just a form of technology, which will enable banks to more efficiently adhere to regulation.

Simon Goldthorpe, executive chairman of national firm at the Beaufort Group, said financial services, particularly financial planning, are fundamental to the UK’s economy.

He added the average age of this workforce continues to increase and we are in urgent need of new and young recruits.

Mr Goldthorpe said: “It will be interesting to see if the big banks are serious about moving back into the advice sector.