An adviser has hit out about the lack of understanding surrounding the value of advice post-Retail Distribution Review (RDR), claiming that the regulator should have done more to inform people.
Barretts Financial Solutions managing director Kim Barrett (pictured) said the Financial Conduct Authority (FCA) failed to ensure there was sufficient publicity around the RDR to educate consumers about past and present charging structures and the value of advice.
A lot of consumers, he claimed, are still oblivious to charges that come out of products, such as trail commission, and they are also unaware of how much discretionary fund management costs, so they cannot understand the value of advice and adviser charges.
He said: "The FCA is making the industry comply, rightly so, but it's not bringing the public with it. So you are getting a lot of changes to the industry and the way things work without the public having a clue what's going on. And that is the fault of the FCA in not bringing more publicity to the subject matter."
He explained that a lot of consumers still felt more comfortable paying hidden charges, even though they may be the same as an adviser's open charge.
A client with a £100,000 bond would be much happier paying 5% commission than a £5,000 fee, he suggested. "Because they don't know about these [charges] it doesn't bother them."
Barratt suggested the FCA should have been more vocal and worked with the press to create a public awareness of RDR and the professionalisation of the industry.
"There is a lot of good coming out of RDR. The industry is being dragged screaming and kicking to become a profession. There is a rush of advisers looking to become chartered and all of a sudden that is the badge of honour. But again it comes down to publicity. The FCA should be out there banging the drum to make people understand what the different qualifications meant."
"It is annoying that the regulator has not come out and been more vocal and articulated these things."
The Personal Finance Society launched a consumer awareness campaign earlier in the summer with the aim to instill confidence in the advice community and educate consumers on the merits of seeking financial advice.
Meanwhile, in a blog post out this month Institute of Financial Planning president Rebecca Taylor urged planners to join in the institute's own consumer awareness campaign, which will form part of its sixth financial planning week taking place at the end of November.
She wrote: "It never fails to amaze me when I meet a client for the first time, how little they know about what we really do as financial planners. Of course, they come in thinking that they know what we do but when they realise it's not just about pensions and Isas they are usually bowled over.
"If we are to grow as a profession here in the UK, we need consumers to understand more about what financial planning really is and how it can help them lead happier and more fulfilling lives.
"By increasing public awareness around this, then it's logical to assume that we'll see greater demand for the services of professional Financial Planners."
