Comment: Will the public ever accept an invoice for advice?

Will the public ever accept an invoice for financial advice? Mark Lisle, compliance manager at Rowanmoor Pensions, says a new form of polarisation appears to be evolving…

Walking from the train station to work recently I bumped into a colleague. In chatting, I mentioned that I had been invited to lunch at a once-traditional, but recently refurbished, pub.

Knowing this was a former regular haunt of the colleague, I enquired whether he had been back since the rebranding. He had yet to visit this former local, as he had been discouraged by another colleague, who had decried the loss of traditional oak panelling in favour of a surfeit of MDF and in whose opinion it had become “all gentrified”.

I mused that financial services might be going the same way. RDR is directly responsible for the decision by some major institutions to cease operating in the personal financial advice arena.

Whilst having culled over a thousand jobs in the adviser sales force, a year ago, I learn that the same bank is now actively recruiting for employee benefits specialists.

Guilty of not policing itself, financial services had regulation imposed upon it 25 years ago. If a lack of professionalism and commission and product bias were major issues in 1986, it has taken a lot of regulatory frog-kissing to reveal the prince that is RDR. It must be remembered that the requirement for the reasons-why letter took ten years of regulation to be imposed, through Regulatory Update 43.

Polarisation

A 21st century form of polarisation appears to be naturally evolving. I do not think this was the intended consequence of RDR, but I fear adding a professionalism kitemark is not a panacea for public confidence and, more importantly, will not act as an incentive for a sea change in consumer attitudes that will see the general public comfortable with being presented with an invoice for financial advice.

Plumbers, yes, solicitors, yes, but financial advice has yet to establish, as a norm, the concept of payment for expertise present in other industries and normally associated with necessary services.

Is financial services struggling for its very survival? The outcome would appear to be bucket-shop internet surfing at one end of the spectrum, and the continuing professional services for the high net worth owner-managers at the other. There is an enormous middle ground.

I fear for the loss of mainstream financial services provision. Will RDR have a similar effect to the rise of the gastropub and the pub chains, leaving a gaping hole in the middle from where the once traditional core business was derived?