The Retail Distribution Review (RDR) has been unsuccessful in improving accessibility to financial advice, according to former Old Mutual Wealth vice-chairman Peter Mann.
Mann, who last month was appointed a non-executive board director at Momentum Global Investment Management, called on the financial planning sector to rethink its current regulatory framework to make advice more relevant to everyone and "not just people who have money".
Speaking at a Momentum UK financial wellness roundtable, Mann said: "Lessons could be learnt from South Africa, which has two separate frameworks to suit the wealthy and non-wealthy."
Research from Momentum UK's latest financial wellness index suggested a large portion of the UK would struggle to meet the current costs of financial advice.
According to the research, which gathered its information from 2,000 face-to-face interviews, almost a third (32%) of UK adults would find it difficult to meet an unexpected major expense.
Almost two fifths (39%) have had to make cutbacks in the last years to make ends meet, while almost a quarter (24%) of UK adults have less than £100 in savings.
Mann quoted recent industry data from Unbiased that indicated the standard hourly fee for a financial adviser is £150, while an initial review costs an average of £500. However, more specialist advice such as advice on defined benefit transfers, may cost significantly more.
The data found just one in five (22%) advisers deal with clients of any wealth level.
Mann argued financial services manufacturers had a large role to play in bringing products and services to their customers, and that understanding of the client should go through all parts of the value check.
'Affordability of advice'
Also at the roundtable, consultant Lucian Camp said he was worried about "the affordability of advice for the mass market consumers" and also suggested a "collective delusion" was causing the financial planning sector to believe it could comfortably adapt from defined benefit to defined contribution schemes,
Mann and his fellow panellists are by no means the first to express concern RDR has failed to close the advice gap. In 2013, a report by Fidelity and the Cass Business School suggested 43 million Britons could fall into a "guidance gap" as a result of RDR.
In 2014, research by Schroders suggested that, while more than half (56%) of advisers thought RDR had been a positive change, many were still concerned about the growing advice gap. Almost a fifth (18%) of those surveyed admitted they had asked small clients to leave their practice.
Speaking after her firm's financial wellness roundtable, Momentum UK managing director Samantha Seaton said: "We must find a way to make the economics work so financial advice is available to the mass-market for the right price.
"Most industries have already evolved and adapted, but in the financial planning sector, we are still waiting for innovation to fully pave the way for this."
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