23 Nov What do people think of Independent Financial Advice and how will it change our industry?
In a recent snap poll conducted by Wren Sterling of 1,000 respondents, we sought to understand the commonly held views about independent financial advisers and why people do or don’t look for financial advice.
Why did we do this?
The past 12 months has seen a raft of regulatory changes that have fundamentally changed the market. They have dramatically increased the choices about savings and investments that consumers have to make. The phrase ‘advice gap’ has entered society as legislators and regulators investigate areas where consumers are faced with important financial decisions, with no apparent access to independent financial advice to support them. We wanted to see whether that was a commonly held view or not.
As with any research, it confirmed some things we thought we knew, but some elements were new to us. In our poll of 18-65 year olds from across the UK:
- Only 13% of respondents had used an adviser in the last year
- Two thirds of respondents think independent financial advice is too expensive or they don’t have enough to invest
- 7% don’t have time to arrange independent financial advice
Only 1 in 8 people has used a financial adviser in the last 12 months. That means there are a lot of people at risk from unsuitable and / or underperforming pensions, savings and investments. A worrying statistic. You may also ask how many people fully understand the cost of using an IFA, or of the amount of investible income required to have a conversation. What this industry has historically (and paradoxically) struggled to convey is the long term benefit of using an independent financial adviser and to dispel the myth that it’s something only available to the wealthy.
According to the survey, the top reasons people want to use IFAs, included:
- Help me achieve my financial goals
- Advice to help me make my own decisions
- Education about the market
This result was less of a surprise to us and it ties in nicely with our purpose. Publications like Money Matters serve to educate our clients about the market. We also recognise society’s trend towards greater self-service and the ability to make our own informed decisions. Ultimately we exist to help people take control, make those decisions and achieve their financial goals.
What do we think it means?
Legislation like auto enrolment is pushing us all towards a strong savings ethos. We think will accelerate as pension contribution levels rise. So there will be a larger group of people with money to invest and manage and unless the government’s strategy changes, there will be no state-backed advice service to help with this, merely guidance. Similarly, pensions freedom (which we covered in some depth in the previous Money Matters) is creating a huge advice gap. Millions of people are now able to access their pension funds and a wealth of choices suddenly open to them.
If our survey is representative, it may not be clear to these people that they can get advice and how advice will benefit them.
How we’re adapting
We’re looking at how we can support an entire generation of people who will need financial advice more than ever before. Our clients like to interact with us in different ways and although many people like the traditional face-to-face meetings, we know that increasingly, people want the option to transact online or over the phone.
To make sure we’re able to help more of our clients through their chosen communication channel, we’ve established a contact centre. Very shortly we’ll be making our online client portal available, where clients can see a snapshot of their financial situation, securely communicate with their adviser and self-serve when it’s convenient to them.
All of this gives our advisers more chance to speak to clients, more information to feed into the advice process and more opportunity to successfully guide our clients towards their financial goals.