Almost half of financial advisers have turned away clients this year because they felt their services were too expensive for them, according to research commissioned by the Association of Professional Financial Advisers (APFA).
The survey, which questioned 250 financial advisers in October, found that 47% of respondents turned away an estimated 60,000 clients during their segmentation process, on the basis that they thought their charges would be too high.
The findings, which were higher than APFA had expected, could be explained by the increased transparency and focus on cost brought about by the Retail Distribution Review (RDR), suggested APFA director general Chris Hannant (pictured).
He also suggested that increased regulatory cost has helped making advice "less viable for some".
Hannant warned that the survey's findings confirmed concerns about access to advice.
Hannant said: "As a result of the implementation of RDR financial advice firms are more focused on costs. Clients' fees need to reflect the cost of providing the service, whilst at the same time RDR has added to the operating cost of firms due to the resource needed to comply with the new rules. As a result advice is now less viable for some.
"Coupled with an overall reduction in the number of advisers, there is a real cause for concern over the public's access to financial advice."
Hannant also reinforced APFA's call for a 'regulatory dividend' to be given to advisers.
"The regulatory overhead is too high for a profession that is now better qualified and poses less risk. Reporting requirements should be streamlined and FCA fees should fall to reflect the reduced risk to consumers and shrinking resource required to supervise advice firms. By reducing the overall cost of advice the regulator can increase access to advice."
Financial planner at Ark Financial Planning Phil Perry said he has not yet turned any clients away but he is expecting " the time will come".
There is a minimum cost to providing advice, he explained, and some clients may not see the value in that.
He said: "There will come a time when there will be 99% of advisers out there turning people away because the cost is too prohibitive.
"If [the clients] see value in it they'll [agree to pay] for it. It's not about what we do and how we do it, it's how the client perceives that to be of benefit to them."
However, there are circumstances in which Perry would advise clients to go down alternative routes, he said.
"If I was going to charge somebody £500 to invest £5,000 and they were only going to invest that for five years, that might be cost prohibitive and I might turn around and say to them don't do it with me, my costs wouldn't warrant what you want to do."
However independent consultancy Harrison Spence managing partner Brian Spence said he believed it was "crazy" for advisers to turn away lower value clients.
He said: "In the new world, face-to-face advice cannot sensibly be offered to everyone. However, in my view, it's crazy for financial advisers to turn their backs on the retail and mass affluent segments.
"Almost all prospective new clients have great potential - turning them away because they don't meet a high minimum threshold is simply pouring money down the drain."
He argued that advisers were missing out on opportunities that could be found in new models involving tiered offerings.
"One route involves creating or partnering with a telephone-based service. Another is to develop an online-only offering, where clients make guided choices via a decision tree."
APFA's research was carried out by NMG Consulting in the first two weeks of October.
It did not determine how many clients had been turned away by advisers before RDR and whether advisers tended to refer clients on to other advisers when turning them away.
APFA said it was planning to do follow-up research to monitor any trends in this area.
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