“There should be a wall, between advice and products, between advice and large institutions, and between our regulators and large institutions. We need an integrity that is impeccable. Until we actually institute a way of bringing good heart, great integrity, and a fiduciary relationship that is sustainable into the industry, we are going to fail. We have to make this change, and we have to make it now.”
– George Kinder
George Kinder’s quote succinctly captures the essence of a critical reform needed in financial services: creating clear, unassailable boundaries to safeguard trust, integrity, and consumer well-being. These walls, or divisions, are not obstacles to progress—they are the foundations of a fair, transparent, and efficient financial ecosystem.
Why a Wall Between Advice and Product Sales?
At its core, financial advice should serve one purpose: to guide individuals toward achieving their life goals. However, when the same entity providing advice also stands to profit from product sales, conflicts of interest arise. These conflicts can distort outcomes, prioritising product sales over genuine solutions.
For example, solutions that don’t involve selling financial products—such as enhancing human capital through education or skills development—often get overlooked. Instead, the focus remains on channelling consumer wealth into investment vehicles, regardless of whether those are the best options for their broader life objectives.
The Role of Regulators: Are They Truly Independent?
This issue is compounded by the regulatory framework. In the UK, financial service regulators, like the FCA, operate under a dual mandate: consumer protection and growth. The Chancellor’s Growth Objective adds pressure to prioritise economic competitiveness, effectively placing product sales targets on regulators’ shoulders (parliamentTV101224).
This inherent tension undermines regulatory independence. When growth objectives become entangled with consumer protection, the result is often a trade-off that favours the financial industry over individuals.
Regulators must return to their primary mission: protecting consumers and ensuring the integrity of financial markets.
The Consumer Impact
Without these walls, consumers are left in a precarious position. Many are unsure whom to trust, resulting in either inaction or reliance on unregulated sources, like social media influencers, for financial guidance.
The FCA has acknowledged that the “advice boundary” (1) is misaligned (parliamentTV101224).
The result is a fragmented system where consumers lack the education and tools to make informed decisions. Trust in the financial sector remains alarmingly low, with many perceiving the industry as opaque and self-serving.
A Call for Change
To rebuild trust, we need structural reform. Financial planners should focus exclusively on providing advice, untainted by the incentives of product distribution. Regulators must distance themselves from growth targets and focus solely on ensuring a fair, transparent marketplace.
“Financial planners should focus exclusively on providing advice, untainted by the incentives of product distribution. Regulators must distance themselves from growth targets and focus solely on ensuring a fair, transparent marketplace.”
This shift isn’t just good for consumers—it benefits the entire economy. A financial system that prioritises integrity and transparency will encourage informed participation, reduce the risk of scandals, and strengthen long-term economic resilience.
What You Can Do
As individuals, we can take steps to demand change:
- Ask Questions: When seeking financial advice, always clarify whether your adviser earns commissions on products (2).
- Educate Yourself: Build your financial literacy to reduce reliance on biased advice.
- Support Reform: Advocate for policies that create clear distinctions between advice and product sales.
This transformation is within reach. By embracing walls that separate advice, regulation, and product distribution, we can create a financial ecosystem built on trust, fairness, and sustainability—one that serves individuals, communities, and the economy as a whole.
(1) The Truth About the Advice Boundary
The term “advice boundary” might sound straightforward, but it’s more complicated—and, unfortunately, misleading. The FCA refers to this boundary as the distinction between “advice” (offered when specific products are sold) and “guidance” (generalised support not tied to specific products). At first glance, this seems reasonable. In practice, however, it conceals a much larger problem: the sales agenda embedded in the financial system.
What Does the Advice Boundary Really Mean?
When the FCA talks about the advice boundary being “misaligned,” they’re acknowledging a flaw in the current framework. But instead of addressing the root issue—the conflict of interest between advice and sales—they focus on how to better facilitate product distribution.
Here’s the crux of the problem:
- Advice today often comes with strings attached—specifically, a product to sell.
- Guidance, on the other hand, offers no protection for consumers, even though it may lead them to make decisions about specific products.
This system leaves consumers vulnerable. If the product fails, guidance offers no safety net because it’s not regulated advice. In effect, guidance shifts responsibility from the financial services sector onto individuals.
What’s Missing?
The gap isn’t about the availability of advice linked to product sales. It’s about the absence of non-sales advice—advice that focuses solely on what’s best for the consumer without any agenda to sell. This is the real solution to the so-called “advice gap.”
Non-sales advice is independent, unbiased, and genuinely aligned with the consumer’s best interests. It addresses the broader financial and life-planning questions that people face, such as:
- How can I create a more sustainable and fulfilling financial future?
- What are my options if I don’t want to take unnecessary risks with my money?
- How can I align my finances with my values and goals?
These are questions that rarely, if ever, require the sale of a product. They require thoughtful, personalised advice—not a pitch.
Why Guidance Isn’t Enough
Guidance, as it stands, is a halfway measure. It’s often framed as a cheaper, simpler alternative to full advice, but in reality, it falls short in several ways:
- It doesn’t offer personalised solutions.
- It provides no consumer protection if things go wrong.
- It still steers consumers toward products without fully exploring other, more appropriate options.
For example, someone seeking guidance on their pension may be encouraged to consolidate their funds into a specific scheme. But without proper advice, they might not understand the long-term implications or risks of that decision.
What Needs to Change?
To truly address the advice gap, we need to remove the sales agenda from the equation. That means:
- Promoting Non-Sales Advice: This generic advice would focus on holistic solutions tailored to the individual’s life goals, not on selling financial products.
- Regulating Guidance More Rigorously: If guidance is to continue, it must be as robust as regulated advice, offering similar consumer protections.
- Empowering Consumers: Through education and accessible services available to consumers direct, individuals can make informed decisions without relying on biased advice.
“The overwhelming majority of retail investors are best served by readily understood, well-diversified and low-cost investments, which are already available from a range of providers, but many retail investors don’t choose these.”
Christopher Woolard, Interim CEO, FCA
How This Benefits Consumers and the Industry
When advice is genuinely in the consumer’s best interest, trust in the financial services industry grows. Consumers feel more confident and supported, leading to better financial outcomes and a stronger economy. Removing conflicts of interest also reduces the risk of scandals and mis-selling, creating a more sustainable and ethical marketplace.
A Better Future for Financial Advice
The financial services industry doesn’t have to stay this way. By building a clear wall between advice and product sales, we can create a system that truly serves consumers. It’s not about guidance versus advice—it’s about ensuring that every interaction prioritises the individual’s needs over corporate profits.
As a consumer, you deserve advice that focuses on you. And as advocates for change, we must continue pushing for reforms that deliver just that. Together, we can create a financial system that’s fair, transparent, and genuinely supportive.
(2) Understanding Adviser Fees: What You Need to Know
When seeking financial advice, one of the most important questions you can ask is whether your adviser earns commissions on products. In the UK, many advisers will confidently tell you that commission on investment products was banned in 2014. While technically true, this can be misleading.
The Truth About Adviser Charges
The term “commission” was replaced in 2014 with “adviser charges.” On the surface, this sounds like a step toward transparency. However, the reality is that the same percentage-based fees that used to be called commission are still applied today—and in many cases, the rates are even higher than they were a decade ago.
The change wasn’t about removing commissions; it was about rebranding them. Instead of earning a commission directly from a product provider, advisers now charge you a percentage of your investments as their fee, and facilitate fee deduction from your product. This means that their income is still tied to the size of your portfolio, creating potential conflicts of interest.
Why This Matters to You
When fees are calculated as a percentage of your investments:
- Your adviser’s income grows as your investments grow. While this can seem aligned with your interests, it also incentivises advisers to recommend transferring more money to them for management—even if that isn’t the best choice for you. Also, investment growth depends on markets, and is wholly independent of the skill of your aviser.
- You may pay more over time. Percentage-based fees can result in significant costs, especially as your portfolio grows. For example, a 1% fee on a £100,000 portfolio is £1,000 per year, but when your portfolio grows to £200,000, that same fee doubles to £2,000—even if the adviser work involved hasn’t increased.
What to Ask Your Adviser
To truly understand how your adviser is compensated, don’t stop at “Do you earn commissions?” Instead, ask the following:
- “Are your fees a percentage of my investments?” This question gets to the heart of how their income is calculated.
- “What is the total cost I will pay, including any initial charges and ongoing fees?” Ensure you have clarity on all costs, including platform fees, fund charges, and the adviser’s fee.
- “Do you offer a fixed-fee or hourly option?” Some advisers provide alternative fee structures that might better suit your needs.
Why You Shouldn’t Settle for Vague Answers
Don’t accept vague or dismissive responses like “It’s just how the industry works” or “You’ll barely notice the fee.” You have every right to know exactly how much you’re paying and what you’re getting in return. Remember, transparency is key to building trust and confidence in your financial journey.
The Benefits of Being Informed
By asking these questions, you:
- Empower yourself to make informed decisions about who to trust with your money.
- Avoid unnecessary costs that could erode your investment returns over time.
- Ensure alignment between your adviser’s recommendations and your best interests.
Moving Toward Greater Transparency
A truly client-centred financial planning experience shouldn’t feel murky or unclear. Advisers who charge fair, transparent fees—unrelated to the size of your portfolio—are more likely to provide unbiased advice that focuses on your overall well-being, not just your investments.
By taking the time to ask the right questions, you’re not only protecting your finances but also helping to create a financial services industry where transparency and trust come first. You deserve advice that works for you—not for someone else’s bottom line.
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