A new survey by My Pension Expert reveals 57% of respondents do not trust independent financial advisers, with 26% saying they have been pressured by an adviser into purchasing a financial product.
Andrew Megson, executive chairman of My Pension Expert, said: “The lack of trust in independent financial advisers is alarming – it is a wakeup call that the financial services industry cannot afford to ignore.”
65% of respondents over 65 say they don’t trust advisers, Megson explained, “poor past experiences, heavy-handed sales tactics, complicated fee structures and unnecessary jargon are all making people turn their backs on IFAs.”
The research surveyed over 2000 UK adults. 76% of respondents called for greater transparency around how advisers calculate their fees. 75% of respondents believe independent financial advice is too expensive.
Just 38% of UK adults have sought independent financial advice at some point in their lives: 65% said they prefer to use free online advance, while 76% feel confident enough to make their own financial decisions.
The research also revealed an overwhelming majority (78%) of people would be more inclined to seek advice from IFAs if harsher punishments were introduced for advisers engaging in unethical practices.
Megson concluded, “The industry must act to change public perception of financial advice.
“IFAs must be more transparent, use plain language and any untoward practices have to be punished.
“Otherwise, Britons will only become more reluctant to seek financial advice. And in the current economically volatile climate, this could prove disastrous for people finances.”
IFA Magazine asked for comments among the financial advice industry;
Kareem Rathore, Partner, Hoxton Capital Management said,
“Unfortunately, the lack of trust financial advisers hold is one that is quite predominant. However, at Hoxton Capital Management, we see this as an opportunity. We set out to differentiate ourselves in the market by being fully transparent in everything we do. Our biggest tool is always putting our clients’ needs first. By creating tailored financial plans for each of our individual clients, our clients trust that we are not ‘trying to sell them products’ but creating opportunities that will benefit their long-term goals.
“Through our regular reviews and personal meetings with clients, we review their financial positions thoroughly and clearly. We have found our client’s response to be overwhelmingly positive, as can be seen from our reviews on Trustpilot.
“Hoxton’s main objective is to change the public’s perspective of the offshore IFA sector. We do this by providing unbiased, holistic financial advice.”
Neil Blankstone Business Development Director of Blankstone Sington said,
“It actually doesn’t come as that much of a shock sadly. The Financial Services industry has a fantastic ability to “shoot itself in the foot”. However, the press should also take it’s fair share of responsibility. Whilst there are many examples of poor financial advice and mis-selling that leads to these sorts of stories, where are the positive stories? Where does the Regulator highlight the good work that is done!.
A classic is the ongoing problem now of finding an advisor who is prepared to stick his neck on the line with regard to DB Transfer advice? With a closed PI market on top, why should advisors always be the one’s who are made out to be the bad guys. I know many who do a fantastic job for their clients but are now either too afraid to DB transfer work or can’t get the cover.
Who highlights the great work that advisors do?! If both the Regulator and the Press made more of the good stories than the bad then the real minority of rogues could be outed. Whistleblowing might even come into favour”
Tim Fassam, Director of Government Relations and Policy at PIMFA, said,
“The majority of advisers provide a truly valuable service to their clients and there is ample evidence to suggest that the vast majority of those that receive advice have positive financial outcomes. No one should feel pressured into buying a financial product, particularly since the introduction of up-front fees and it is worrying that some consumers don’t trust advisers.
“As PIMFA recently acknowledged in our Future of Advice policy paper, there are a lot of consumers that do not access financial advice for a variety of reasons, chief among those reasons is the cost of advice. This is one of the reasons that among the 12 recommendations in the paper PIMFA called for a simplified advice regime that can be delivered at a lower cost, as well as a clear definition of advice as opposed to guidance.
“We also called for a new set of professional standards for advisers to adhere to that could also lead to sanctions if advisers were found to have fallen short of those standards. These are recommendations that PIMFA is actively working towards making a reality”.