28th September 2017

The Heath Report 3 Needs Your Help

Panacea has been a major influence on the Heath Report process and the creation of Libertatem. Derek Bradley persuaded Garry Heath to return to the world of industry politics with an invitation to a Panacea meeting and the initial Heath Report was created after Garry and Derek had a meeting with the FCA on RDR and the possibility of removing all trail commission on heritage products.  

In January 2015, we published the Heath Report 2 which remains the only non-regulator sponsored report on the effects of RDR on the availability of consumer advice. The effect of THR2 was immense and worldwide. It described how 16m consumers would end up without advice. 10 million from the traditional advice market and 6 million from banks.

It was heavily used by the Treasury Select Committee in its criticism of the FCA which in turn lead to the FCA being declared “in special measures” by Andrew Tyrie – the TSC’s Chairman. THR2 has informed the debate in RDR in many countries particularly Canada and copies of it are held in the library of the UN.

But all that was 30 months ago and a new report in needed. Firstly, we need to see if advisers have continued to cut down on the number of consumers they serve. Traditionally each adviser had 405 consumers/clients. THR2 saw this number drop to 195 but we suspect the culling of clients continued after January 2015.

THR3 will give us the new number using the same methodology as before. Multiplied by the number of advisers we will then have the current size of the market. We may see another drop to around 5m adviser clients. This would mean that 11m consumers have lost access to their adviser in less than a decade.

But the new part of the THR3 will look at the longevity of adviser businesses. If we are to maintain access to advice, for even 5m consumers, we will need the current adviser numbers to maintain and hopefully grow. This can only happen if there is proper succession planning and new advisers find their way into the market.

We may discover that by 2025 so many advisers have retired that the sector cannot even support the clients it has currently and given the costs of regulation and FSCS are split amongst the surviving advisers, we could see a double whammy with the smaller number of advisers unable to support such a huge cost base.

So THR3’s main thrust is the future of advice. If, as we suspect, the number of retirees far exceeds the new entrants we need to know now and work with providers and others to create proper training and a clear career ladder.

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Last month, we asked advisers to contribute to THR3s research costs and these are now covered. When it is published we want to make a big splash so if you would like to help fund us use this link http://www.libertatem.org.uk/donations/

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