The head of proposition outlined a number of “channels” which could help reach out to people put off by the cost of regulated financial advice.
He pointed to a move towards advised products which are “kitemarked”, meaning they have a more rigid structure compared to most advised products sold today.
Such products would have to meet suitability criteria, maximum payments and agreed disinvestment points, added Mr Willoughby.
The Tax Incentivised Savings Association is currently looking at developing the kitemarked product concept, which was one of the recommendations outlined in its Savings and Investment Policy project.
“In some ways this is a step back in time to products which were designed to a state-prescribed format,” Mr Willoughby said, adding they would be “pretty hard to mis-sell”, provided clients meet the strict entry criteria.
In the absence of valid alternatives, this option should be given some mature consideration. Simon Willoughby However, he said these types of products would not offer the best advice for everyone, instead representing “good enough” advice for the majority.
Mr Willoughby argued this should not result in bad or harmful advice, with the key issue being if the government would stand behind such a structure, or whether the product providers could be licensed to do the same.
“In the absence of valid alternatives, this option should be given some mature consideration,” he stated, suggesting advisers had a tendency to restrict themselves to clients who were only commercially viable now, meaning they ignore a sub-section who have the potential to be commercially viable later down the line.
One way of tackling this, he said, was to adopt a “multi-advice model” to broaden client demographics and boost the long-term value of their businesses.
Another option, Mr Willoughby said, was to give certain clients with high levels of wealth or income an opt-out of the normal consumer protection regime in order to access investments which would not be appropriate for most retail customers.
Lastly, Mr Willoughby said he sees advice shifting towards simple products sold directly to consumers online, a segment which advisers cannot tap into effectively.
“While robo-advice has an important role as part of the solution to the advice gap, it is unlikely to be the silver bullet many would wish for.”
In March, the regulator and government published the results of their Financial Advice Market Review, aimed at narrowing the advice gap.
It laid out 28 recommendations, including work to redefine advice along Mifid lines and based upon a personal recommendation, along with the Financial Conduct Authority being urged to create a dedicated robo-advice unit; the latter being launched earlier this month.
Marlene Outrim, managing director of Uniq Family Wealth, said: “I really question why we should go back to a bygone era. The problem with those old products that were rigid in design and complex in their ability to achieve proper benefits.
“This was why many of them had to be terminated over the years and replaced with something more flexible, transparent, easy to understand and with lower charges.
“I believe that we have to move forward and make greater use of technology so that we can provide basic offerings in volume, in a way that is easy to access, straightforward and affordable”.
katherine.denham@ft.com
