If you’ve walked into your local bank lately looking for financial advice and been turned away faster than a Krispy Kreme salesperson at a Weight Watchers meeting, you shouldn’t be surprised. Due to RDR (the Retail Distribution Review which was unleashed on Jan 2013), most of the high street banks have drastically changed their advice offerings, and some have even culled them altogether.
The latest to fall into difficulty with RDR and advice is Axa, which provided the Co-Op bank with financial planning services, along with branches of Yorkshire and Clydesdale banks. Unfortunately for them, news broke yesterday of its decision to put an end to its in-branch financial planning services, costing 450 jobs and citing the failure in “not having found a model which balanced the regulatory requirement that the service be profitable in its own right, whilst setting advice fees at an affordable level.” So basically they have found that they are unable to make a profit from offering advice through the new regulations.
The Co-Op, Yorkshire and Clydesdale banks follow a lengthy list of their fellows into the murky depths of financial planning scrappage. Barclays was the first to announce the closure of its financial planning arm in January 2012. It now only offers investment advice through its arm for wealthier customers, Barclays Wealth, which is only open to clients with more than £100k’s worth of investments.
Next to follow was HSBC, which declared it was to overhaul its financial planning services in April last year, planning to only offer restricted advice (advice that doesn’t consider the whole range of providers/products available to the client, only those chosen by the intermediary) to those holding more than £50,000 in savings or investments with HSBC, or those with a salary over £100,000. HSBC was swiftly followed by RBS in June 2012, which adopted a similar line, making its advice offerings restricted only. Lloyds TSB announced in September 2012 that it was only going to offer advice to clients with more than £100k in savings.
So the bottom line is, unless you’ve got megapounds in the bank already, they don’t want to know, as due to the inception of RDR, their business models mean the modest to average investor is no longer worth their time. There are going to be a lot of people out there who are going to be (if they haven’t been already) dropped like a hot rock, without means of financial advice. That’s where we hope to come in. We believe that everyone should have access to financial advice, and shouldn’t have to pay extortionate amounts to get it, and because of the technology we’ve built our advice platform with, we can achieve this ethos. Those wanting simple guidance can make use of our free online planners, powered by our online adviser, Doughbot. For those yearning after a traditional approach, we offer adviser appointments from just £35.
Are you one of the investors who’ve been dropped by your bank recently? Where are you planning to go next for your financial advice? Would you consider turning to online tools? Send us a quick tweet or email with your thoughts.