Authorised Financial Advisers have raised concerns about the lack of access to advice for low-end investors and have called for a simplified advice model in order to be able to provide advice to these clients without the full compliance burden of a personalised advice service.

Institute of Financial Advisers president Nigel Tate recently predicted regulatory changes that would allow advisers to more easily “scale” their advice. 

“Scaled advice doesn’t necessarily mean lower quality advice but it’s not so in-depth and doesn’t have to be a 20-page document; you can do four to five pages and make it a bit simpler,” he said.

Lambert said five-page disclosure documents are “realistic” even under the current regulatory settings, but how advisers get paid can have an impact on how long the documents end up.

“The biggest area that takes up the most room is disclosure of commission,” she said.  “If you have a simple remuneration structure such as a flat fee for service this won’t take as long to explain.”

She said there’s an element of “reality versus perception” in advisers’ complaints about the regulatory regime requiring huge amounts of paperwork.

Uncertainty about exactly what is required has caused some advisers to do too much, Lambert said. 

“I think advisers really really want to do the right thing and sometimes they are unsure of the expectations of the regulator in terms of what they are doing so they are choosing to do more so they don’t fall short of what their obligations are.”

Lambert said it’s not just sole practitioners who are being cautious; some of the big organisations with lots of lawyers are also producing hefty disclosure documents.

“Lawyers do like to put lots of clauses and disclaimers in,” she said.