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03 March 2015

With just over a month to go before the introduction of new freedoms around retirement income, research from the Association of Professional Financial Advisers (APFA) reveals that pensions advice is the most common form of advice for which advisers are turning clients away.

 

The research, conducted for APFA by NMG Consulting, found 6 in 10 advisers (61%) had turned away clients during the 12 months to January 2015, up from 54% the year before. Of those advisers, 57% had turned away potential clients seeking pension advice and 43% had turned away clients seeking ISA advice.

 

Financial advisers identified the affordability of advice as the primary reason behind being forced to turn potential clients away. In the 12 months to January 2015, 42% of financial advisers turned away clients because the advice services they offered were not economical based on their client’s needs and circumstances. This was an increase on the 12 months to January 2014, when 37% turned away clients for this reason.

 

Chris Hannant, Director General of APFA, commented:

“Pensions advice is widespread across the industry, and given the announcements made by the Chancellor in last year’s Budget you’d expect advisers have seen an increase in pensions related enquiries. While that may explain why turnaways on pensions advice have been so common, with only weeks before the biggest changes to the pensions industry in a generation come into effect these figures are concerning.

 

“Policy changes are pushing the public to take a greater interest in their finances and encouraging a more hands-on approach. This increases the need for financial advice, but the weight of regulation is pushing up costs for advisers and putting professional financial advice out of reach for many who would benefit from it.

 

“Our figures, in contrast with the conclusions drawn by the FCA in their recent RDR post-implementation review, are pointing to the opening up of an advice gap. For an increasing number of potential clients, it seems professional financial advice is not as affordable as it needs to be.

 

“It is vital that these consumers are able to access affordable financial advice. Advisers are doing their part, now they need the FCA to do theirs by reducing the burden of regulation. We need a regulatory environment that allows room for innovation, enabling advisers to bring down the costs for consumers and adapt to their clients changing expectations.

 

“It’s not about reducing standards; it’s about reducing complexity.”

 

 

ENDS