Sixty thousand consumers priced out of financial advice this year
The survey by the Association of Professional Financial Advisers (APFA), which questioned 250 financial advisers in October, found that almost half of respondents have turned away clients this year because they felt their services were too expensive for them.
Some 47% of advisers turned away an estimated 60,000 clients during their initial advice process, on the basis that they thought their charges would be too high.
The findings, which were higher than APFA had expected, could be explained by the increased transparency and focus on cost brought about by the Retail Distribution Review (RDR), suggested APFA director general Chris Hannant.
RDR, which came into force at the start of 2013, changed the way customers pay for financial advice. Financial advisers can no longer receive commissions from product providers for recommending investment products to customers. Instead, they now have to charge their customers for advice.
Hannant also suggested that increased regulatory cost has helped make advice “less viable for some”, and warned that the survey’s findings confirmed concerns about access to advice.
Hannant said: “As a result of the implementation of RDR financial advice firms are more focused on costs. Clients’ fees need to reflect the cost of providing the service, whilst at the same time RDR has added to the operating cost of firms due to the resource needed to comply with the new rules. As a result advice is now less viable for some.
“Coupled with an overall reduction in the number of advisers, there is a real cause for concern over the public’s access to financial advice.”