Regulation stifling advice sector innovation
Current regulatory mechanisms are very process-driven and are not facilitating some of the more innovative business models in the financial services sector, legal advisory firm The Fold said.
The company's managing director Claire Wivell Plater said many businesses are trying to disrupt the status quo by offering consumers more direct access to services in investment and investment advice.
But she believes there is a need to move away from the current focus on compliance process to a more grass roots solution to make businesses operate efficiently and honestly.
"The problem we've had is over the successive iterations of the financial services legislation it's so much easier to add process rather than to fix problems, which are relatively more substantive and often can't be fixed by process but we're still left with the process requirements," she said.
"I really do think that it's stifling business growth in the financial services sector at the moment."
She also said advisers fear losing clients to automated models but should look at this as an opportunity to use automatic technology in their own advice business to increase efficiency.
"Clients might not necessarily want the adviser to be involved in the execution of the advice or all of the management of assets, but perhaps only some but a lot of clients will still want the opportunity of verifying things with an adviser face-to-face. That will have an impact on advisers' pricing models as well," she said.
Wivell Plater suggested advice businesses might need to adopt a model that is not predicated around receiving just asset-based fees. They could adopt a fee structure where they can be remunerated for the ad hoc advice that they give even when they are not managing one or all of the client's assets.
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