'Advice profession can't support a levelling up agenda driven by the FCA'

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'Advice profession can't support a levelling up agenda driven by the FCA'
ByCarmen Reichman

Many advisers agree there is a "huge" advice gap that is still growing, and while some have come up with innovative ways to serve the less asset rich, others believe the burden should not fall on the advice sector.

"There comes a point where you have to have a minimum fee for clients if you want to run a sustainable business," said Joshua Gerstler, a Chartered financial planner and owner of The Orchard Practice.

He said the cost of providing advice was so big that as an industry it was difficult to find ways to close the "huge advice gap".

Yet, he believes there are ways, and Orchard, he said, was "always innovating to improve our processes and find ways to deliver a great service without charging more than we need to."

Gary Boakes, director at Verve Financial, believes there are certain things advice firms can do to alleviate the situation, which is a stubborn remnant of the Retail Distribution Review 10 years ago.

"As an industry, we aren't very good at showcasing what we do and the benefits of working with us, as a consequence people don't see our value, they believe they can't afford to work with us and unless they know someone who has worked with an adviser who they are actively recommending, they don't always know what we do," he said.

To help raise awareness Verve Financial publishes three educational blogs a month covering a range of topics, and provides financial education sessions in its local community, as well as army days and health fairs.

It also has a policy of separating financial planning from financial advice and allowing clients to choose whether to arrange the financial product or not. 

The firm offers a fully online process or a face to face service depending on the preference of each client.

The fact that many advisers still charge a percentage of assets under management means [the advice gap] is unlikely to change.Lisa Tipton, director of financial planning at New World Financial Group

Nigel Sycamore, IFA and director at Clear Workplace Pensions, similarly believes the advice gap is growing and that advisers can help.

"We’re investing heavily in solutions for the less financially aware for 2023 and we believe these are best delivered through the workplace," he said.

But Tim Mottram, financial planner at Grey Parrot Financial Planning, is not convinced that the advice gap is actually still growing.

"The reason I don't believe the advice gap is growing is that due to market returns over the past decade, more people have over £250,000 of invested wealth and so the number of people we can help has grown," he said.