Yesterday’s announcement that HSBC is to cut 3,166 jobs from its financial advice division from the beginning of June, is further alarming evidence of a growing vacuum of financial advice in the UK.

The banking giant has confirmed that it is to restructure this section of its business, and the changes will result in its wealth advisers falling under its retail banking division, and its commercial finance advisers as well as certain relationship manager positions being scrapped completely.

This news follows the decision taken in recent times by many other leading banks and building societies including Barclays, RBS, and the Lloyds Banking Group to scale back their advice units, or to insist that individuals have £50-100K of investable asset before considering them as clients, or to exit the advice market altogether.

The impact of RDR on high street banks

These changes within the banking industry are a consequence of the Retail Distribution Review (RDR) which came into effect on 1st January 2013 – a policy which has driven up standards and transparency, but which at the same time has left millions of people, effectively, abandoned without access to advice, because the ‘supply’ has been significantly reduced.  Indeed, some industry reports say that bank adviser numbers are down a staggering 44 per cent in the last 12 months alone.

Whilst we may not have always liked banks or the advice they gave, at least before RDR was implemented there was more help at hand for most people.

But now, with so many leaving the market or only offering so-called ‘restricted’ advice, an enormous independent advice ‘black hole’ has been created at the very time when there’s an increasing need for sound advice in order to help people save and invest wisely for the longer term, because financial planning is not taught to the public, we’re all living longer, living costs are rising, taxation and pensions seems to be continually changing, and employer benefits and state support are being reduced.

The entire ‘high street’ financial advice industry is in a state of transformation, but what it will transform into remains unclear at this stage.

As such, the government and the independent advisory sector should work more closely together to promote the benefits of professional financial planning because there needs to be a radical cultural shift in the savings culture to ensure the UK’s long-term competitiveness and economic growth; because it helps people become more financially secure and independent and therefore less reliant on the State; and because it would, evidently, benefit the industry in which we as advisers all have a stake.