Expert: Jessica Reed, Partner, Financial Services, Farrer & Co Facilitator: Martyn Laverick, Director, Catalyst Partners
Headlines:
- Lack of awareness and engagement from consumers the core issue - The group agreed the main problem is lack of awareness and engagement from consumers who have assets but are not seeking advice, especially younger people with smaller pots. Life events are key triggers for people to start investing or seek advice. Younger groups favour digital engagement while older consumers still value human interaction.
- Importance of financial education and guidance - Many highlighted previous FSA education programs as valuable for improving financial literacy and trust. Starting education early and collaboration between government, regulators and industry on awareness were seen as important. But advisor capacity to engage people en masse is limited - technology and bigger firms also needed.
- Debating the advice/guidance boundary - Some felt the FCA could provide more certainty on permissible guidance. Others wanted a redrawn boundary or core advice regime to expand affordable advice. But advice needs to be commercially viable. Fulfilment after guidance was noted as important - consumers need clear next steps.
Discussion:
The discussion covered several key topics related to addressing the advice gap for consumers with smaller investable assets.
The group agreed there is a lack of awareness and engagement from consumers, especially younger people, who have some assets but don't seek advice.
There was debate on the triggers that lead consumers to invest, with life events seen as a key driver, and how different age groups prefer to engage - younger consumers favour digital while older groups still value human interaction.
The role of financial education and guidance was discussed extensively. Several advisers highlighted the previous FSA education programmes as valuable for improving financial literacy and building trust. The importance of starting education early and joining up government, regulators and industry to improve awareness was also noted. However, the capacity of adviser firms to engage consumers en-masse was seen as limited; technology and engagement from bigger firms would be needed alongside advisers.
The boundary between advice and guidance was debated. Some felt the FCA could provide more certainty on what support firms can offer without crossing into advice. Others advocated for a redrawn boundary or core advice regime to expand affordable advice options. However, advice still needs to be commercially viable.
Fulfilment was also mentioned as key - consumers need clear next steps after guidance. Overall, the advice gap was framed as an engagement and awareness issue rather than a lack of trust in advisers. But solving it requires a collaborative, long-term approach improving education, expanding guidance and affordable advice options for younger consumers.
Key takeaways:
- Setup a working group of government, regulators and industry to improve financial education and consumer awareness
- Engage with technology firms on solutions to engage younger consumers and drive awareness
- Analyse options for redrawing advice/guidance boundary to enable more personalised guidance
- Develop core advice and guidance propositions to expand affordable advice and guidance options
- Conduct consumer research on triggers for investing and advice-seeking behaviour
