Advisers split on personalised guidance proposals

Advisers split on personalised guidance proposals

Advisers are split on proposals to introduce a more personalised form of guidance which would have lower regulatory requirements than advice, research has found.

Aegon and NextWealth published their fourth ‘Managing Lifetime Wealth: retirement planning in the UK’ report today (February 23), which found that 41 per cent of advisers had an open mind about whether the Financial Conduct Authority should explore personalised guidance.

The second most common response, selected by 19 per cent of advisers, was that personalised guidance "creates significant risk of harm".

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Some 12 per cent said it was something they would want their firm to explore for certain client segments, while 11 per cent said "it's a good idea but not something my firm is likely to offer" and 8 per cent simply said "there’s no need for this". Some 9 per cent of advisers said they were unsure.

The report, which surveyed 212 financial planners between November 29 and December 9, said the results “clearly show” the detail of where the FCA proposes going with this will be key.

The proposal for a form of guidance would have lower regulatory requirements than full-blow financial advice, and is in an effort to lower the barrier to entry for investment products.

Last year, the FCA calculated there were 15.6mn UK adults with investible assets of £10,000 or more. Of these, 37 per cent hold their assets entirely in cash, and a further 18 per cent hold more than 75 per cent in cash.

“We see a lot more demand from new investors looking to start their investment journey but the financial barriers of advice costs aren't cost effective for the new investor or the financial advice firm,” Oliver Whiting, director of Essex-based IFA Future Life Capital, told FTAdviser.

Yesterday (February 22), a document circulated by the FCA emerged proposing a "guided sales model".

Whiting said the move seems empowering to those beginning their investment journey and should hopefully encourage investors to begin investing earlier.

“I see this as positive for the industry as I'm yet to see an advice firm that has successfully tackled the advice gap for the younger generation,” he said.

But some were more cautious. The FCA said the model could be automated, though there is scope for humans to be involved along the way.

As a result, Derek Bradley, CEO of Panacea Advisers, and Anthony Villis, managing director of First Wealth, both highlighted the risks which might come with financial planners taking on any liability at any stage. 

Bradley cited the British Steel debacle as a recent lesson in history of why it is so important liability is set in stone from the beginning.