Advisers will find it difficult to develop much-needed cheaper advice models until the Financial Conduct Authority (FCA) lowers its costs, the Association of Professional Financial Advisers (APFA) has said.
The trade body has published research echoing its findings from last year: some advisers are turning away clients because they feel their requirements do "not justify the cost" of their service.
Some 37% of advisers who had turned away a client did so for this reason, according to an APFA survey of more than 230 advisers carried out in January.
APFA said the findings show the industry needs to develop "viable but lower cost" advice options, but that the FCA must first lower its costs on advisers, such as by overhauling its allocation of fees and further simplifying firms' reporting duties.
Earlier this month, the FCA proposed that firms would only need to complete section K of the Retail Mediation Activities Return (RMAR) once annually, rather than the current twice-per-year.
"The FCA's recent proposals to simplify RMAR reporting are a welcome step in the right direction", APFA stated in its report Accessing advice: Providing viable options for consumers.
"[But] we need to see the regulator doing everything it can to streamline bureaucracy, so that the cost to advisers of giving advice is minimised,"
Developing lower-cost advice solutions presents both a challenge and an opportunity, it added.
Remember 'focused' advice?
It said its survey suggested some advisers were already offering 'simplified' advice to clients, even though others remained unsure about what the term meant. APFA suggested 'focused' advice, which the FCA does distinguish from simplified advice, was a "vital consideration" for many advisers.
According to its final guidance on simplified advice, published in 2012, the key difference between focused advice and simplified advice is that the former involves the client stipulating the boundaries of the service they wish to receive.
The latter, on the other hand, describes streamlined advice processes delivered face-to-face, over the phone or online which aim to address "straightforward" needs of consumers. It will relate to one or more specific needs, with no analysis carried out on anything else, and "may" result in a product recommendation, according to the guidance.
