Taking financial advice could be about to get much cheaper, after the Government announced a review of the market which is likely to promote low-cost online systems and could see the amount of free support significantly expanded.
The study will be conducted jointly by the Treasury and financial regulator the Financial Conduct Authority. Adviser trade publication FTAdviser reports it will effectively look at ways to “plug the advice gap”, a phrase used to describe those who would benefit from professional support with their finances but are not able or willing to part with fees of up to £600 for a one-off review.
This issue has come into sharp focus since reforms to the market at the end of 2012, which required advisers to charge transparent fees for their services and precipitated the exit of high-street banks from formal advice, and the introduction of radical pension reforms giving pensioners much greater freedom over how they use retirement savings. The review will consider all types of retail financial products, the BBC notes, including pensions, savings, mortgages and insurance.
The Daily Telegraph says the review, due to report back before the 2016 Budget, will examine “how access to advice could be opened up” for those with modest savings. It says it could result in measures to encourage banks back into the market, as well as expansion in free support available through the likes of the Money Advice Service, which is paid for by levies on financial services firms.
City AM adds that a key point of focus might be the so-called “robo-advisers”, that is online systems which provide simple portfolio management and investment recommendations. These solutions are very common in the US but few have been willing to roll them out widely in the UK, where tough regulations on what constitutes full ‘advice’ leave firms open to the threat of complaints and compensation claims.