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‘RDR advice gap’ still Widening

A report from adviser champion, Garry Heath, has warned that over 20m will end up without access to professional financial advice, as a knock-on effect of the Retail Distribution Review reforms.

Mr Heath is currently completing a report, known as the Heath Report, which is analysing changes within the advice industry since the implementation of the RDR in January 2013. What is clear already, according to Mr Heath, is that a number of advisers have already left the industry. As well as this, there are many advisers who have been left unable to provide their usual service to existing clients.

Clients who are worst off since the introduction of the RDR are those who were being served by general IFAs who have not developed a segregated advice model or become boutique, described as “undefined advisers”, but were still serving clients who were least likely to be able to pay fees.

There are fears, according to the report, that clients using undefined advisers could be completely “wiped out”.

RDR advice gap

Mr Heath said in the report: “RDR is the paradigm shift in financial services distribution. Currently 3.5 million clients have lost an adviser who has already left the industry. In addition, another 3 million clients are attached to an adviser who no longer has the capacity to service them, totalling 6.5 million.

“This may rise to 14.5 million when the full effects of RDR become clear. The banks have also jettisoned their advice force, leading to an additional 6 million banking clients losing their access to advice.

“So between 12.4 million and 20.4 million UK consumers have lost, or may lose, their access to financial advice. Most of these clients want advice when they need it rather than regularly”.

The report also revealed that the number of advisers in the industry has fallen by 7,000 since November 2009, from 38,750 to 31,750.

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