In light of World Financial Planning Day, CEO of intelliflo Nick Eatock discusses how firms can close the advice gap and meet the needs of people who have not traditionally taken financial advice.
Those of us in the advice sector know that financial planning is for life, not just for World Financial Planning Day (WFPD). But the benefit of an awareness day is that it allows us to come together to boost recognition of the value of advice among consumers and it also creates a platform for debate around where we see the future of the profession.
This year’s theme for WFPD is “live your today, plan your tomorrow.” Making the right choices and taking control of your finances so you can meet your needs now and in the future is the cornerstone of good financial planning. But we know that not everyone takes financial advice.
The average advice client
FCA figures last December found that just 8% of UK adults had received financial advice in the previous 12 months. This is up from 6% in 2017, but it still means a sizeable proportion of the population is missing out on the benefits of professional financial planning.
Part of the issue is that financial advice is often seen as the preserve of older people, who have accumulated wealth, usually through workplace pensions, and now need help with more complex financial decisions like funding their retirement. And there’s some truth to this perception. According to research by Schroders last year, the average client average age for two-thirds of advisers is between 51 and 64, but for a quarter it’s over 65. And it found that the average client is getting older, with half of the advisers surveyed seeing an increase in average age over the last five years.
But that doesn’t mean that younger people are not interested in investing. Direct investment platforms are seeing changes in investor demographics, with Hargreaves Lansdown reporting that 83% of new clients in the last financial year were under 55, AJ Bell that the average age of new direct customers in the first half of 2021 was 38, and Interactive investor that a quarter of new account holders in the first six months of the year were under 35.
