Just four years on from the RDR and people are already queuing up to announce the death of the independence it was designed to promote.
The RDR was supposed to herald a huge advance in advice, and was going to drive the change from financial planning being an occupation to a profession. To be fair it has; it has just made that professional advice inaccessible to about 95 per cent of its potential market in the process.
And while the masses have been frozen out of advice, advisers themselves (admittedly with some help from the government, regulator and the trade press) have been tying themselves up in knots, quibbling around semantic points about which most of the public could not care less.
The pension freedoms should have been – and still could be – an opportunity for financial planning to re-establish a foothold with potential clients.
But instead of exploiting the possibilities we have all been pre-occupied with an ongoing debate as to the underlying differences between what constitutes ‘advice’ and ‘guidance’.
I know this matters, but I have to tell you that, to most of the general public, it really doesn’t. The distinction between ‘advice’ and ‘guidance’ is one no consumer can be bothered making. To the masses the two terms are as interchangeable as, I don’t know, ‘occupation’ and ‘profession’.
This debate on semantics is a distraction to what advisers could be doing to provide a better service and offer demonstrable value.
The advice gap has continued to grow, and will continue to grow further as long as we as an industry are too busy with these navel-gazing irrelevances, thinking about tiny details that matter to us, rather than the big issues that matter to consumers.
Against this backdrop, the banks currently returning to advice do not (or should not) represent a threat to independent advisers, but instead a safety net to rescue those millions that those advisers have shown no interest in servicing.
Bank advice is almost certainly not as good as independent advice, but it is also almost certainly better than no advice at all and that is the choice most people are faced with.
If banks returning to advice demonstrates the RDR has failed, then advisers must take at least part of the blame for that failure.
But I do not yet think it has failed. Rather, the changes we are currently seeing in the marketplace merely represent everything settling down into something workable for and sustainable after the RDR shook it all up.
The recent high profile acquisitions by Standard Life-owned 1825, do not represent anything more significant than that either, but a handful of champions of the independent model apparently abandoning their principles to go restricted have prompted more rabid noise about independence’s death.
