That is the assessment of the fast-evolving advice and guidance market presented by PWC director Steve Folkard at the CA DC Investment Conference yesterday.
Folkard, who has been working both with the FCA and DWP on Pension Wise, and also with several providers on their D2C advice/guidance offerings, said there were numerous players on the verge of bringing sophisticated low-cost advice offerings to market.
He said the FCA’s Innovation Hub is currently processing 75 innovations, many of which are for simplified advice or guided D2C models. Many of these simplified advice models are being developed by providers that are not established financial services players, he said.
Folkard said: “The FCA currently have 75 innovations being taken through the Innovation Hub process at the FCA, and a large number of them are simplified advice models. And they are not all coming from financial services providers.
The driver is not on the high net worth clients, but a focus on those who can’t afford to pay for advice.
Aviva shelved its D2C proposition, which they had been working on for a considerable period of time, largely because of the merger with Friends. But be very aware that there are a number of firms of significant size who are looking to expand their D2C capacity because they don’t see a mechanism for accessing the individual consumer coming through the advisory channel, whether through individual or corporate advice.
“You can significantly streamline the advice process for the average customer that is compliant, simpler, low cost and gives good outcomes. I was involved in a project where we started with all the possible scenarios, then we worked back from that, defined exit routes for all of those that could not go through a simplified scenario and we got to a point where there were 50 per cent of those who went through the process who were able to get a good outcome and where it would be compliant. It can be done, but it took about a year to develop.
“Pension Wise does a good job. People are coming out with a good understanding of what their choices are, but it makes it harder because they have more choices.
Low cost D2C models will plug that advice gap. And when two or three models are in the market, and working, then we will see others coming on board.”