New research commissioned by MetLife concludes that the cost of providing advice is the biggest barrier to advisers offering their services to mass market savers.
The research was commissioned as part of MetLife’s response to the Financial Advice Market Review (FAMR).
The figures revealed that over two-thirds of advisers say costs of providing advice outweigh the returns. Also, just over half warn that regulatory barriers and risk of providing advice are the main reasons preventing them helping mass market savers.
MetLife believes that reforms of the Financial Services Compensation Scheme levy for advisers and the streamlining the Financial Ombudsman Service would help reduce costs for advisers. It also recommends reasonable and proportionate time-limits on FOS claims against advisers from consumers.
Managing Director of MetLife UK Dominic Grinstead said: “It is clear that the current environment is not serving the best interests of the less well-off. The lighter touch model would be equally robust in terms of ensuring that the best possible outcomes are achieved for customers, but crucially it would be designed to be appropriate for the needs that the mass market are more likely to face.
“Consumers have varying needs and for those with less sophisticated investment needs, a simpler advice model may be more appropriate. This in turn, would benefit from a proportional, lighter touch regulatory framework, which would reduce costs and make advice more easily accessible. Digital technology also has a role to play together with other channels to market, ensuring that consumers have a choice of how advice is delivered to them.”
Consumer research has also shows that one in three savers believe the cost of advice is too high and what’s more, that one third believe they do not need advice. This breaks down as follows: half of over-65s believe they do not need advice and 28% of those aged 18 to 24, say they do not know how to access advice.
As further suggestions, MetLife says that that pensions and how to access financial advice should be included in schools’ financial curriculum. And that allowing financial advice to be offered by employers as an optional workplace benefit would encourage take-up.
MetLife, a part of Irish services company MetLife Europe Services, provides financial products to UK IFAs via its UK branch.
