You are here: Home - Investing -

Consumers set to reject paying fees for financial advice

0
Written by:
30/07/2012
The introduction of the Retail Distribution Review (RDR) is likely to increase the UK's financial advice gap, according to the business advisers at Deloitte.

RDR comes into force from 31st December 2012, and changes the way consumers pay for financial advice.

Commission paid to financial advisers will be banned and replaced by adviser charging, where consumers pay advisers a fee for advice.

The survey of more than 2,000 people, conducted for Deloitte by YouGov, found that 84% of people are unaware of RDR or that consumers will face paying a fee for advice when RDR is implemented.

The poll highlights that more than half of all consumers will reject financial advice if charged a fee, however attitudes to paying for advice vary depending on the wealth of the consumer – with the likelihood of someone paying for advice going up the wealthier the customer.

Andrew Power, lead RDR partner at Deloitte, said: “The research indicates that many consumers, particularly in the mass market, are unwilling to pay such fees. As a result, the advice gap – the shortfall between the amount of advice required and that provided – is likely to increase as advisers leave the industry or focus on wealthier customers.

“These changes pose a huge challenge to banks, building societies, insurers and asset managers who will have to find new ways to distribute their products, and advisers who will have to persuade consumers of the benefits of paying for financial advice.”

Bank customers are five times as likely as IFAs’ customers to reject paying fees for advice.

Seb Cohen, head of insurance research at Deloitte, said: “Customers of banks and insurers are less likely to pay for advice than the customers of IFAs, and the lower the level of savings a consumer has the more likely they are to reject paying an advice fee.

“This is important because our research also highlighted the low level of savings among consumers. Nearly a third (29%) save nothing each month, nearly a fifth (17%) have no cash savings and almost half (45%) do not save into a pension.”

Related Posts

Tag Box

Debt

Pension

Spending

Financial fitness

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Five ways to get on the property ladder without the Bank of Mum and Dad

A report suggests the Bank of Mum and Dad is running low on funds. Fortunately, there are other options for st...

The essential Your Money guide to the April 2018 tax changes

As we head into the 2018/19 tax year, a number of key changes take place to existing policies while some new i...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

YourMoney.com Awards 2018

Now in their 21st year, our awards recognise the companies offering the best products and services to consumers

Money Tips of the Week

Read previous post:
Proposed FSCS cap rise ‘concerns’ BIBA

Insurance brokers have raised concerns about Financial Services Authority (FSA) plans to increase their compensation threshold under the Financial Services...

Close