HSBC Is Doing It Again. This Time, There Is No Carve-Out.

The competitive pressure will spread through the banks. The change in customer demand will reach much further.

By Steve Conley, Founder, Academy of Life Planning

HSBC is doing it again.

I was there when it announced its retail advice withdrawal in 2011. I argued that trusted advisers created lasting value and should be repositioned. Their relationships and expertise were capabilities the bank could develop.

The bank took a different view.

After rebuilding its wealth proposition and announcing fresh growth ambitions, HSBC is now reportedly preparing another substantial reduction. Proposed cuts could reach around 70% of its UK financial advisers. Consultation is underway.

Citywire places the changes in the mass-affluent business, typically serving customers with £1.5 million or less, rather than the whole private banking operation.

That decision will put pressure on every competing bank to reconsider its retail advice workforce.

We have seen how this spreads.

Barclays left mass-market advice in 2011. RBS substantially reduced adviser numbers. Other banks changed their propositions and restricted access. Different decisions, different timings, but a recognisable industry retreat.

Once one institution changes its model, the others face a new question at every budget meeting:

Why are we still carrying costs that our competitor has decided it can remove?

HSBC has now made that call again, according to the reports, after rebuilding the business.

The same salaries, compliance obligations and shareholder demands will face the same challenge from an apparently cheaper operating model.

The timing and scale will differ. The incentive to follow is already there.

But the larger question is what happens afterwards.

Last time, business displaced by the banks could flow towards vertically integrated wealth firms.

This time, those firms face the same change in customer demand. There is no reason to assume they will inherit the opportunity—or escape the pressure.

That is the story the wider retail advice market needs to confront.

During the RDR transition, banks and wealth firms faced different commercial choices. Banks could fall back on other revenues. Firms dependent on wealth management income had stronger reasons to preserve their distribution models.

Vertical integration offered room to manoeuvre.

The original framework contained specific accommodations for arrangements within the same group and flexibility over allocating and recovering advice costs. Detailed cost-allocation guidance remained under discussion when the final rules were published. The FCA later acknowledged flexibility within the existing regime.

The practical consequences were visible to people working in the market.

Around ten years ago, I worked with more than 300 SJP firms implementing auto-enrolment solutions for their clients. Across that work, I repeatedly encountered pension and bond advice presented as free, although its costs existed within the wider charging structure.

Contemporary reporting independently exposed misleading explanations. A July 2017 Which? investigation found that four of twelve SJP advisers failed to explain likely costs in detail, only seven mentioned ongoing charges, and one said there were no charges or fees. Adviser remuneration was bundled within SJP’s charges.

Formal paperwork could state that advice was not free. The problem was the gap between those disclosures and what customers understood. The evidence examined does not establish a specific regulatory permission to call advice free.

Nevertheless, integrated charging models persisted. SJP introduced its revised structure on 26 August 2025, separating advice, product and fund charges and removing early withdrawal charges for new bond and pension investments, with transitional arrangements for existing business. More than twelve years had passed since RDR took effect.

The significance is that a regulatory transition can leave room for an existing commercial model to adapt and survive.

The present transition is being driven by a force that offers no equivalent accommodation: customer demand.

Regulators and parliamentarians can weigh access, competition, investment and growth. Firms can make representations. Organisational complexity can become an argument for flexibility. Implementation can be phased.

Customers do not have to participate in that negotiation.

They have no obligation to preserve a firm’s distribution network, protect its acquisition strategy or support its growth targets.

A company’s size does not give it a claim on their future spending.

And the public now have AI too.

My previous article explored the implications for customer capability. The question here is what happens to the market when that capability changes how people buy support.

Someone may still value expert help with retirement, bereavement, business succession or a difficult family decision. Human judgement may become more valuable at those moments.

But that person may increasingly question the need to pay for a permanent intermediary relationship between those moments.

They may want to purchase expertise when needed while retaining their own records, planning process and decisions.

Demand for human expertise can endure while demand for the prevailing advice model declines.

For a large wealth firm, that distinction reaches far beyond an adviser’s diary.

Recurring income supports valuations. Expected future income supports acquisitions. Those expectations shape investment in recruitment, distribution and expansion.

If customers change how they buy support, the consequences travel through the whole structure.

Vertical integration may help a firm retain more margin on business it keeps. It cannot guarantee demand for the relationship itself.

Nor does automating the channel settle the question.

A firm can make intermediation cheaper to operate while customers become less dependent on intermediation. Productivity gains and declining demand can arrive together.

The first may disguise the second for a while.

There is no carve-out from becoming less necessary.

Whatever weight policymakers place on a large institution’s employment footprint or contribution to a growth agenda, they cannot make customers continue to purchase a proposition they have outgrown.

This is why I regard HSBC’s reported decision as a possible death knell for the prevailing UK retail financial advice model.

The threat reaches into the assumptions underpinning the market’s recurring revenues, valuations and growth plans. It cannot be understood merely as a staffing decision at one bank.

The banks will feel competitive pressure to reduce the cost of delivery. Large integrated wealth firms will face that pressure alongside a more fundamental question about what customers still want to buy.

The opportunity is to redesign the relationship before those pressures force a retreat.

Experienced advisers could become episodic Total Wealth Planners: professionals supporting consequential decisions across a person’s whole life, while that person retains their information, their plan and their day-to-day capability.

That gives expertise a meaningful future. It requires institutions to change what they sell and how they charge.

Removing people while preserving the same dependency-based proposition leaves the underlying problem unresolved.

Fifteen years ago, I argued that banks were discarding capability they should have developed.

Today, the entire market needs to reposition that capability before customers reposition the market for it.

HSBC has made its reported call. Its competitors now have a cost benchmark they will have to answer.

The large wealth firms should stop assuming that another bank retreat will simply deliver more business to their door.

Last time, the retreat changed who supplied advice. This time, it could change what customers are willing to buy.

Regulators can accommodate a business model.

Customers can outgrow it.

See also: HSBC’s adviser cuts: we have seen this before. This time, redesign the role. AoLP 7th October 2026.