According to the Advocis report, in the UK, a large percentage of advisors--up to 25% of the entire force--have left the industry. This has left many middle-class people without access to an advisor. The Advocis study warns that similar measures contemplated for Canada could lead to a similar gutting of the industry here. "I sometimes use the phrase 'good intension, unintended consequences.' The intent--better disclosure, transparency--is hard to argue with. But when you see what these things can do--25%, or 10,0000 advisors gone from the market place--you get unintended consequences," says Innes.
In the case of the UK, the effect of the reforms has been to see advisors drop middle-class clients and more toward more well-off clients in a search for fees. The consequence is that the middle-class is being left without access to a financial advisor. "The effect of this shifts have been to send the advisor up-market, which ends up taking services away from the middle class, which is where you need advisors," says Innes. “This is basic supply and demand. By reducing the size of the advisor force, the cost of advice has gone up.”
Innes points out, rightly, that "study, after study has shown that having an advisor has a positive effect on the accumulation of assets over time. Having an advisor involved with a corporate dc plan will see more people enroll and contribute at a higher rate. Financial advisors do more than provide short-term financial planning advice. The longer the relationship with an advisor the more assets there are. Engaging in a long-term relationship with clients helps Canadians accumulate greater wealth and pave the way for better saving strategies and retirement planning. There is value to having an advisor," says Innes.