In its consultation on a new core investment advice regime, launched at the end of November, the FCA makes clear the centrality of financial advice to this goal. The regulator wants to make it easier for firms to provide advice that is proportionate to the needs of the consumer at a lower cost.
Also in November, The Investment and Saving Alliance backed a tabled amendment to the financial services and markets bill that would have paved the way for a formal regime of personalised guidance. While the amendment was not adopted, it is clear from the focus on this area that policy and regulation are likely to come.
With so many seeing their cash holdings eroded by inflation, it makes sense for regulators to be concerned about the advice gap.
However, I have sometimes seen it suggested that it matters less to advice firms themselves. In a thriving industry, why would firms seek to provide advice to people with smaller pots, potentially on a one-off basis, for lower fees?
The flaw in this argument is that firms have their own advice gap to address: finding the next generation of clients.
In a consumer duty world, there will be increased focus on clients in decumulation and the balance between service, value and fees in a diminishing portfolio.
Many of the 4.2mn are the clients of the future – those who do not meet minimum investment thresholds yet but will do one day. Savvy firms are now getting to those clients early and starting to build relationships and brand recognition.
Hybrid adoption is just the start. As tech advances continue to free up adviser time and generate cost savings, firms will be able to look at other aspects of their working models and think more creatively about the clients they can afford to serve.
This should help more consumers find the financial advice they need, through the current uncertain times and beyond.
Ben Goss is chief executive of Dynamic Planner
