In FT Adviser today, Neil Stevens, Joint Chief Executive of Fintel, argues for the expansion of financial advice as the cure-all for the so-called “advice gap.” But let’s cut through the fog of professional self-interest and examine the real issue: the disappearance of commission-hungry intermediaries masquerading as advisers. Is this a crisis? Or is it, in fact, progress?
Stevens paints a romanticised picture of financial advisers as noble custodians of consumers’ futures, selflessly guiding them through the labyrinth of financial choices. But let’s not kid ourselves—many advisers have historically been anything but. What we’ve witnessed is the gradual but necessary weeding out of those whose primary interest was not the client’s well-being but their own profit margins, driven by hefty commissions on high-cost, low-value investment products.
Fee Deduction: A Legal and Ethical Abyss
Stevens bemoans the tightening regulatory environment that has supposedly squeezed advisers out of the market. Yet, he conveniently overlooks the fact that some advisers were more focused on deducting ongoing fees for delivering no tangible service—an illegal and unethical practice. Perhaps the regulations weren’t the problem; perhaps they were the solution.
Instead of lamenting the decline of these questionable practices, shouldn’t we be celebrating the fact that consumers are now less likely to fall victim to these parasitic fee structures? Financial advice, if it is to be truly valuable, should offer more than a conveyor belt to a shiny new product with a lucrative fee attached.
The Asset Hoover Phenomenon
Stevens suggests that consumers are missing out by not accessing professional advice. But let’s be clear about what much of this advice often entails: the relentless consolidation of assets into a single provider’s pot. Like a giant financial hoover, the advice process has historically been more about funnelling assets under management than providing genuine, client-centred solutions.
What about non-financial options, such as gifting assets, purchasing tangible goods, or simply leaving investments in place where they are? These solutions are seldom championed in the advice process because they don’t generate a cut for the adviser. Independence in advice is a noble concept, but it remains elusive in an industry so heavily tilted towards asset accumulation and management fees.
The Commoditisation of Retail Investment
As Christopher Woolard, former CEO of the Financial Conduct Authority (FCA), wisely pointed out:
“The overwhelming majority of retail investors are best served by readily understood, well-diversified and low-cost investments, which are already available from a range of providers, but many retail investors don’t choose these.”
Woolard’s statement undercuts Stevens’ rhetoric. The retail investment market has been commoditised. Low-cost, diversified solutions are readily available, and there’s little need for intermediaries to add layers of complexity—and cost. The idea of an “advice gap” is a misnomer; what exists instead is a sales gap, and that’s a very different issue.
The Misguided Blame Game
Stevens criticises providers for not funnelling product holders into advisers’ laps. But why should they? The role of providers is to create accessible, straightforward solutions for consumers, not to serve as lead generators for the advice industry. The suggestion that providers owe their customers to advisers smacks of entitlement, not consumer advocacy.
If Stevens were championing genuinely independent, fee-only professionals who operate without a vested interest in gathering assets under management, then perhaps his argument would carry more weight. But the reality is that much of the advice industry remains mired in conflicts of interest.
The Way Forward
The solution isn’t to lament the loss of advisers or to relax regulations so that questionable practices can creep back in. It’s to empower consumers to make informed, independent financial decisions. Technology, education, and straightforward investment solutions can bridge the so-called “advice gap” without reintroducing the conflicted middleman.
The narrative Stevens promotes—a world where advisers are indispensable—is outdated. The industry has evolved, and so have consumers. The future lies in accessibility, transparency, empowerment, and simplicity, not in propping up a diminishing group of intermediaries seeking wealth delegators; intermediaries who are, at best, an optional extra in today’s investment landscape.
In short, we don’t need more advisers. What we need is more clarity, more independence, and a lot less rhetoric.
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