The Personal Investment Management & Financial Advice Association (PIMFA), the trade association for the wealth management and financial advice industry, has published a new policy paper that calls upon the industry, government and regulators to work together to reform professional financial and investment advice.
In its new paper, The Future of Advice 2021, PIMFA has published 12 recommendations that it believes will help create a thriving industry that offers professional advice for all.
PIMFA observes that recent survey findings show 90 per cent of consumers have never taken paid for financial advice and 79 per cent of those who had not taken advice had no intention of doing so in the future.
Some of this is down to a lack of awareness of the benefits or need for advice, with 62 per cent of consumers believing they do not need help managing their money.
Another issue, PIMFA suggests, was a lack of trust in the advice profession, perpetuated by pension scandals or news stories involving consumers with a bad experience of financial advice.
In addition, a lack of awareness around the value of advice and the cost of services played a role. Yet firms find themselves unable to offer lower cost services in the face of rising and unpredictable regulatory costs, PIMFA highlights.
By recognising these issues, PIMFA recommends a review of the definition of advice and review the regulatory perimeter.
In the paper, PIMFA suggests that they would like a future market that: “works well for advisers, by allowing firms to thrive, develop and innovate within a more effective and cost-efficient regulatory environment”.
PIMFA recommends that the approval of financial promotions should become a regulated activity, with stronger regulatory controls in relation to the exemptions for high net worth and sophisticated investors.
Elsewhere, among other recommendations, PIMFA highlights the importance of improved online consumer protection from financial scams through the Online Safety Bill.
In addition to PIMFA’s immediate priorities this year, the association aims to lobby the government and work with stakeholders across the industry, consumer groups and the regulator to ensure that economic harms are included in the upcoming Online Safety Bill to provide greater protection to consumers from financial scams.
Liz Field, chief executive of PIMFA, comments: “There is now more than ever, an increased need for financial and investment advice and support, but most people still don’t engage with financial advice, seeing it as an expensive service for the well-off.”
According to Field, PIMFA is committed to broadening consumer access and to creating the best environment for the financial advice and wealth management profession to deliver their services and meet their clients’ needs.
“We recognise that none of the recommendations we put forward today can be implemented overnight. But if we are to create an Industry Fit for the Future that ensures Professional Advice for All, it is vital the industry, regulators and government work together,” Field adds.
