Opportunities for advisers following FAMR
FAMR has made it easier for advisers to deliver advice that is not face-to-face, says Peter Bradshaw, national account director, Selectapension
The much anticipated Financial Adviser Market Advice Review (FAMR), published in March, has set up a positive framework for the industry, which should be welcomed by advisers.
The review is forward looking in nature and its recommendations, if implemented, should broadly improve the affordability and accessibility of financial advice and guidance to people at all stages of their lives. It also seeks to bring clarity to consumers, who are often confused over the difference between guidance and regulated financial advice.
With the focus now shifting to meeting the needs of the mass market, advisers have an opportunity to grow their business cost-effectively and efficiently.
The role of technology is key to ensuring advisers can service a wider number of clients profitably, and it is refreshing to see the FAMR recognise that ‘robo’ or automated advice will play an increasingly prominent part in the advice process.
The FAMR has also asked the FCA to extend its innovation hub, Project Innovate to create an “Advice Unit”.
Project Innovate supports both small and large businesses in developing new products and services that could benefit consumers, and support the advice process.
This suggests that the Government has taken on board the increasing importance of technology in the process whilst reinforcing that not all advice needs be delivered face to face.
Supporting a greater number of clients
We believe greater automation will ultimately help advisers support a wider number of clients, allowing a greater dissemination of financial advice.
Its use has the potential to plug the advice gap on two fronts; fostering engagement among those with smaller pension pots, and serving technically-savvy younger generations in the manner they prefer.
As such, rather than a threat, advisers should see robo-advice as a part of an advice firm’s toolkit, improving their proposition.
At Selectapension, we are increasing support to advisers with the launch of our own new robo service, Pension Monster, later this year. It will improve consumers’ knowledge and create realistic expectations about living in retirement, providing a quick and easy way to find out what options are available.
Drive for clarity
The FAMR also made an attempt to address the widespread customer confusion around the differences between advice, personal recommendations and guidance. It called for reforms to create a single definition for regulated financial advice.
This, however, is optimistic given the previous attempts to define ‘independent advice’.
This drive for clarity and increased provision of guidance has been reinforced by the change in government services. The closure of the Money Advice Service, announced in the Budget, will be followed by the creation of a new slimmed down body, which will include The Pensions Advisory Service (TPAS) and Pension Wise. With one key body for consumers to refer to, this is another step towards simplifying access to guidance.
The review promotes the provision of advice to the mass market and suggests streamlined services will drive down the costs of advice. The Final Report recommended tracking the development of the advice market over the next 12 months, and promised to report back in a year, when we will see the real value of its recommendations.
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