The Personal Finance Society has called upon financial planning professionals to help it gather evidence to prove the value of ongoing advice to the City watchdog.
The trade body said it intends to “challenge” the Financial Conduct Authority’s “scepticism” over the extent to which consumers should rely on ongoing advice.
In its consumer investment data review published last year, the FCA suggested an increase in transactional advice rather than ongoing advice was the best way to ensure investors take risks with part of their wealth to improve their financial resilience.
But in an announcement today (February 8), the PFS said it wants the FCA to “rethink” this approach.
“The FCA came to this conclusion based on consumer research suggesting many were unaware how much they were paying for advice and assessed its value by looking at the performance of their investments (which is distinct from the charges they are paying to have been placed in them),” the trade body said.
“The Personal Finance Society is calling upon financial planning professionals to share the value of ongoing advice delivered to their clients so this can be presented as evidence to the FCA of why they should rethink their approach.”
The PFS has asked members to share their examples of the value of ongoing advice to their clients, either by emailing in or by tagging the PFS’s social media channels and adding the hashtag #pfsvalueofadvice.
Matthew Connell, director of policy and public affairs at the PFS, said the FCA has shown it believes advice is an important element in achieving good outcomes for consumers, but that it has “also expressed scepticism around the extent to which consumers should rely on ongoing advice”.
He added: “The key to winning this argument is to create evidence of a population of clients who not only benefit from the undoubted advantages of ongoing advice, but who can articulate those advantages in the context of the fees that they are paying for advice.”
One adviser, who prefered not to be named, said it was “high time” the PFS bat for independent advisers all over the country.
“The regulator appears to heavily favour larger firms over smaller ones, and business models that are transactional rather than on-going,” they said.
“But those who lived through the collapses of major financial institutions in 2008-09 know that size isn’t enough to ensure good practice, or prevent conflicts of interest.
“And anyone who’s ever been put on hold or told ‘your call is valuable to us’ by a recorded message from a massive financial institution, knows full well the value of having a financial adviser who genuinely knows each client as an individual.”
They said the key role of the regulator should be to promote competition and diversity of choice for consumers, not to “stifle” and “overwhelm” small firms.