Advisers have warned their industry is moving at a “glacial pace” and must do more to cut costs and innovate services for the sake of consumers.
Concerns raised by the Financial Conduct Authority regarding the state of the advice market earlier today have been met with agreement by some in the industry.
The regulator published its long-awaited review of the advice market post RDR and the FAMR, in which it warned of “significant” price clustering and little competition.
Anthony Morrow, co-founder of Openmoney, said traditional financial advice could be expensive and often only available to those with thousands of pounds to invest.
"The industry must do more to cut costs, simplify communications and improve transparency by using technology, alongside human advisers, to offer regulated advice around straight-forward products that meet people’s future financial needs and goals at far lower fees than traditional advice."
Mr Morrow said the FCA was right to call out the lack of innovation in the regulated advice sector, which he warned came at a tine of "enormous innovation" in non-regulated areas of financial services.
He added: "Clearly innovation at speed is possible within financial services and the advice industry needs to step up to the plate and find better ways to provide accessible and affordable advice to all, regardless of how much money they have."
Whilst the FCA found the financial advice market was "improving, albeit slowly”, it warned the sector had “further to go”.
The review found both the number of advised consumers and advisers had grown since the introduction of RDR, but said innovation for the sake of affordability was still lacking in the market.
Becky O’Connor, head of pensions and savings at interactive Investor, agreed cost was one of the main reasons uptake in advice was stunted.
Ms O’Connor said: “According to the FCA, people mostly say they don’t take advice because they don’t need it.
“But the other problem with the uptake of financial advice is simple: it’s just too expensive for most people and so it doesn’t reach many of those who could benefit.”
The regulator's research found more than 80 per cent of ongoing holistic advice services had adviser charges set at only three price points - 0.5 per cent, 0.75 per cent and 1 per cent.
The City watchdog warned the cluster in charges was not explained by "economies of scale", with little indication firms with more clients, or more affluent clients, had lower charges.
A "glacial" pace
Sarah Waring, client and proposition director at Quilter, warned growth in financial advice had been moving at a “glacial” pace.
Ms Waring said: “It has been some time since the regulator’s interventions through RDR and FAMR and there is palpable frustration from both the sector and the regulator that more improvements haven’t been made.
“The supply and demand dynamics within the advice market are complex.