Consumers priced out of full advice may yet be able to seek the expertise of an adviser via a chargeable "dip in, dip out" information-only model, according to Cofunds distribution director Andy Coleman.
Presented as a potential solution to the so-called ‘advice gap', Coleman suggested a client would receive information from an adviser, potentially pay for it, then purchase a solution online.
"We have to be creative," he said. "I think we're probably going to see something between the two offers [advice and non-advice]: the concept of being given advice but then executing on your own, so you kind of dip in and dip out of advice."
Coleman (pictured) was speaking during a live TV debate assessing the impact on the advisory community of changes introduced following the Retail Distribution Review (RDR) at the end of last year.
The panellists - alongside Coleman were Baker Tilly head of wealth management John Porteous, The Paraplanners co-founder Richard Allum and Financial Discounts Direct managing director Paul Penny - agreed the RDR had disenfranchised a portion of consumers from seeking face-to-face advice, and that viable models to cater for them had yet to surface.
"There perhaps is a gap emerging where fee-based financial planners cannot offer face-to-face relationships with clients that are economic for those clients," said Porteous, who said he believed the role of technology would be significant.
< < Watch the debate here>>
"It's very important we don't allow a lack of access to advice, because advice, socially, is going to be incredibly important. Some of the people that can't afford face-to-face advice are the ones who need that advice the most. The emergence of the next generation of business model that can reach out and, not just transact with them, but educate them is going to be incredibly important."
Paul Penny, who pointed out his direct-only business had not suffered as a result of the RDR, added: "There is a proportion of the country that is disenfranchised from face-to-face advice. You've got execution-only businesses which can provide access to funds and information, but still don't provide advice.
"We still haven't seen a model arise yet which ideally suits that client who still needs the advice but can't really afford it. It's a difficult situation for the industry, but the industry is pretty ingenious; models will emerge."
Penny said that advisory firms considering building execution-only propositions to cater for a segment of their existing client base might wish to tread carefully.
"The big risk here is regulatory. To be able to demonstrate that your ex-only client is a real ex-only client, rather than one you've advised and then you're picking up revenue through the different channel. I'm not saying it's not the right thing to do, but it does make life more complicated."
The panellists also discussed issues including professionalism, the cost of advice, provider facilitation of adviser charges and clients' preferred methods of payment during the 30-minute debate.
Watch the debate HERE.
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