After a meeting of financial advisers this week, a younger member of my team asked me if I thought there were actually too many financial advisers. ‘How can there be?’, was my first reaction, ’there were over 100,000 of us in the ‘90s, now there are only around 25,000. Why do you think there’s an ‘advice gap?’ Thinking about it, however, the problem is not too many advisers, but too few ‘profitable’ clients. Most of those 100,000 were actually selling savings plans, life insurance and pensions for commission. The plans they (or, rather, we) sold were great; provided you remembered they were ‘long-term’ and didn’t cash them in for at least 10 years. Many, of course, did and so they were regulated away. Most advisers are now only able to run a sustainable business helping those who already have money, rather than those hoping to make some. The financial services equivalent of ‘health and safety gone mad’ perhaps; or the law of unexpected consequences.
“Advisers fearful of further compliance and regulation”
We know, of course we know, that regulation is, or at least should be a ‘good thing’. If those who need or should seek advice can be confident that they’ll be told the right thing, that someone has looked at those ’too good to be true’ investments before they’re allowed to take your money; or, in the case of a Woodford, while they’re raking it in to make sure it’s going where it’s supposed to.
