In late 2022, the FCA proposed a separate and simplified financial advice regime, to provide a greater accessibility and cheaper form of advice for consumers. These proposals, will result in a new, entry level tier of adviser, with lower qualification and CPD requirements and the freedom to provide advice on mainstream investment products and investments held within a stocks and shares ISA, which currently has a maximum annual allowance of £20,000 PA.
Understanding the challenges the industry has faced over the last 10 years, such as declining Adviser numbers and an ageing Adviser population, we think that this creates an opportunity to ‘reset’ old practices and to create a way of bringing new and fresh talent into the advice arena, particularly as it has the potential to provide a stepping stone to becoming a fully qualified, authorised Adviser.
Ahead of the FCA consultation, the ASHL Group partnered with NexGen Planners to start building it’s own Adviser Development Academy. ASHL Group understands the importance of playing a part in securing the future of financial advice and by offering a route into the industry for new talent, thus shaping the current age gap. The first cohort of the Academy launched in November 2022, with it’s delegates already undertaking their studies, aiming to be qualified by the end of 2023. ASHL understand that this is the beginning of the journey for these trainees and are working with their member firms in order to grow the skills and experience that can only be gained by working with clients in a safe and secure way.
New Advisers are only one part of this equation, the other critical side being that it also has the potential to create greater access to financial advice to retail consumers who might otherwise not be able to do so. A long term focus of the FCA has been for financial advice to be available to all and not just those with wealth. At its most positive, this could mean that the clients who will be able to benefit from this simplified regime, will ‘grow’ with the adviser, particularly where they are younger and also starting out on their own careers, lives and financial objectives. Our hope is that this decision to create an entry level advisory position will have a positive impact in reducing the amount of retail clients who lack either awareness of the benefits of financial advice or believe they can’t afford it.
Gaining access to younger clients with less assets, that would not normally be attractive to more experienced and established advisers and firms, forms part of the bigger picture in helping to increase the awareness of financial advice to a new generation of client. If the industry can shift mindsets and embrace this shift, this could be the beginning of the process to bridge the gap in addressing the risk, that all advisers face, of intergenerational planning or the advice dying with the current client.
Our main concern is that the gap between being able to advise on a S&S ISA and being able to advise on the full range of financial products, will be a big leap. The definite and tangible benefit of the FCA’s proposals will be the ability to bring more advisers into the profession and if embraced, it could be seen as a way of helping establish our younger advisers with the experience of some core advice skills (and following their route to being fully qualified).
These proposals are a definite forward step in creating opportunities to give and receive advice, accepting more needs to be done to narrow the advice gap for the millions of retail consumers for whom financial advice would be life-changingly beneficial.
Whilst still in consultation it has some obvious risks, but could potentially create an opportunity for well run businesses to attract the next generation of client, and also the children of their existing clients.
Whilst we don’t believe that this is the full answer to some of the questions posed, we at the ASHL Group believe that this provides us an opportunity to begin the transformation of an aging industry.