All the regulation and monitoring in the world will not get rid of that perception. At best people will assume advisers are recommending the most personally lucrative products they can get away with.
Fees are a problem for many, even if they shouldn’t be. I can understand that ‘free’ advice is still an attractive proposition and more attractive than no advice. But I am sure there are factors beyond the fee structure that have also contributed to the gap.
The RDR overhauled advice. Commission-based sales have given way to fee-based advice but maybe the big change has not been the shift in the first word from commission to fee, but the altering of the last word, a move from sales to advice.
Fee-based advice could work for all, but maybe we need to just remember how we used to sell. Apply sales to the service rather than the individual product.
The advice gap is a massive problem, but the pre-RDR status quo of lots of people getting sub-par advice was not exactly a brilliant situation either.
Bad bank advice also led to reputational issues for the whole advice sector. I’ve written before that consumers do not differentiate, and advice as a whole is tarnished by the inadequate offerings of the tied, restricted, hamstrung or whatever FCA-stipulated caveat the masses are oblivious to in the current regime.
We need to keep trying to educate people about the benefits of independent, fee-based advice, the limitations of the alternative, and the fact they pay for both.
Those who do not want to pay a fee would be better off going through a D2C option. That would not be free either, but would be nearer to it than a bank adviser.
Of course, that would also require a much greater level of engagement than we currently have.
But whether that engagement is improved by education or by selling, I still believe we can achieve it rather than simply drifting back into old ways, purely because the intended audience wrongly thinks they are free.
