The majority (88%) of those who take ongoing financial advice say it represents value for money, and that figure is almost the same (86%) for those who have received one-off advice.
However, of those who did not pay for financial advice in the last 2 years, 70% said it was unlikely they would do so in the future. One of the barriers was trust, with almost two-fifths (38%) saying their lack of it would need to change for them to seek advice.
That’s according to consumer research, undertaken online by YouGov* with 2,035 British adults online, weighted and representative of all adults (18+), for the lang cat’s Advice Gap 2023 paper.
These statistics highlight the ‘perception gap’ between those who take advice, who are largely very supportive and appreciative of the service they receive, and the distrust of those who do not.
Mike Barrett, the lang cat consulting director, comments: “The Advice Gap has never been a simple question of who is and isn’t taking advice. If things are to change, it is vital to understand what drives people to take advice, and what prevents them from doing so. Affordability is clearly a big part of the problem, but it’s not the only issue – there is a lot more that could and should be done to improve the perception, availability and accessibility of advice.
“Whilst those who do pay for advice believe they received good value for money and trust their adviser, there’s a distinct lack of trust among those who do not. The perception gap is a big issue for the advice sector, and if addressed, 3.1m more people would potentially pay for advice.
“This can only be addressed by a collective voice – providers, trade bodies, regulators and advisers all have a role to play to improve the perception of the advice sector.”
The lang cat also undertook research among its panel of financial advisers, receiving 210 responses. It shone a light on the disconnect between the profession and regulator on the advice gap.
For example, when asked what should be done to address the advice gap, 42% of adviser responses contained a reference to cost of profitability, while a quarter (25%) referenced the FCA and regulation as a barrier.
Plus, almost three-quarters of participants said the FCA’s recent broadening access to financial advice for maintain investments paper (CP22/24) will either have no effect due to the core demographics not being commercially viable for them as a business (42%), or a lack of interest resulting in respondents having not read the consultation paper in the first place (32%).
One adviser said: “Let’s be brutally honest – commercially they are not viable – especially considering the FCA’s continued increase in regulatory stipulation. Nevertheless, it’s important to have financial advice accessible. I suppose we can look at our service proposition to help as much as possible.”
Another added: “If an FCA is paper is the motivation for improving, we aren’t getting it right! Services need to adapt to a degree, but the tools exist. It’s not easy to make a financial case, but it’s not impossible.”
What lang cats lovely sponsors are saying:
Sarah Layden, Direct Wealth Director at Aviva, says: “With an uncertain economic backdrop and consumers facing increasingly complex financial decisions, it is more important than ever that people can access the advice and guidance services they need to manage their money and savings effectively to achieve the right outcome for them.
“Savers are faced with endless and often complex choices about how to fund their retirement. Full financial advice has a vital role to play in serving consumers, but many people do not seek that advice and they need help. This report is an important reminder that reform is needed if we are to make simplified advice more accessible and affordable.”
M&G Wealth Advice CEO Ross Liston adds: “Trust between client and adviser is a prerequisite for successful financial planning. But the crux is that relationship has to be found and formed in the first place. We need to encourage more people to plan for better financial futures than ever before and we need more advisers throughout the industry to serve them and deliver the best experiences and financial planning that they need.
“This straddles education and opening up as many options as possible for people to access financial advice in a way that best suits their circumstances.
“We are not alone in investing heavily to do this – technology to deliver increased value, financial education, a range of advice options and increasing our numbers of financial advisers. It is critical that the industry works as one to deliver this.”
*All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2,035 adults. Fieldwork was undertaken between 13th – 14th February 2023. The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+).
