Are we about to train more financial advisers?

Christina-Clegg-Independent-Financial-Adviser
Christina-Clegg-Independent-Financial-Adviser

Article by Phil

The financial adviser market has been suffering from a serious lack of adviser numbers for almost 10 years now. Back in 2012 and just before, when the Retail Distribution Review came into force and advisers had to re-qualify, the industry lost over 10,000 advisers almost overnight. Many of those had been working for Banks and Building Societies who shed over 6,000 adviser jobs between 2011 and 2014 as most closed their adviser businesses. However, it looks like things are starting to change.

An increasing number of “provider” businesses are starting to announce that they are creating new adviser arms. This started a few years ago with Standard Life creating 1825 and Lloyds Bank joining together with Schroders to create Schroders Personal Wealth. More recently we have seen new adviser ventures from Seven Investment Management, Vanguard, Quilter and Fidelity.

Broadly, this is seen as good news. More advisers mean that more people will be able to access advice and increased supply might also drive down the costs of advice. There’s also an argument that in the current environment providers need a regulated advice arm in order to be able to speak to their clients about products without overstepping the advice boundary.

However, if you are reading this and considering what adviser to choose you should bear in mind the commercial benefits of providers having their own advisers. As the FT Adviser points out, providers want to get “closer to the end client because at the moment they are exposed in that their product is only selected on performance or cost”.

Importantly, this product selection is made by Independent Financial Advisers on behalf of their clients – and is quite right done on the basis of performance and cost.

The FT Adviser goes on to say, “If you can get to the front end with the client, where advisers are, you have more influence …. With the end client”. In other words, you can “sell” your products better, regardless of performance or cost. This is what “tied” advisers do. They are only able to recommend products provided by their own company and they are required to disclose this tied relationship clearly to clients at the outset of any discussions. There is nothing wrong with tied advice per se, as long as you know that is what you are getting – restricted advice. One of the biggest advice companies in the UK St James Place is a tied adviser, so many people are clearly happy to receive restricted advice, but if you want independent advice you can only get that from an Independent Financial Adviser.

The Benefit of Independent Financial Advice Explained

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If you have any questions about Financial Planning please feel free to give us a call on 01282 614444 or drop us an e mail to enquiries@ccfps.co.uk

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