Where have we got to with closing the advice gap?

Financial Advisory

Emily Landless

Advisory DistributorsBack OfficeBrandCorporate GovernanceCultureDigitalEmerging MarketsEngagementEquitiesFinancial AdvisoryMacro TrendsManagement InformationReputationalSecuritySocial Media

According to some recent research from NS&I, 70% of financial advisers are willing to advise people with portfolios of less than £50,000 but 71% of Britons would only consider consulting a financial adviser if they had more than £25,000 to invest. So just what is commercially feasible from your point of view? Do we know at what level people feel they can justify the cost of financial advice?

Headlines:

  • Smaller initial investments are still being dealt with by the majority of firms but there are issues with how to provide an ongoing service for small sums.
  • Technology was considered as an answer to part of the problem.
  • There is a feeling of some corporate social responsibility to help smaller savers.
  • The gap isn’t getting any smaller and the majority of firms have not taken any steps towards helping smaller savers.

Key issues and challenges:

  • The industry is dealing with a poorly educated population in terms of financial matters which needs to be addressed at school level, however this is very long term.
  • The language and products of the industry are complicated and it seems that there are no “moves afoot” to simplify things. This needs to change.
  • Sensationalist journalism does not help promote the financial services industry in a positive light and does not help build trust.
  • Whilst technology can help, it can also be dangerous. E.g. by leading people to make important financial decisions without proper thought. There are dangers people could do the wrong thing very easily.
  • Clarity needs to be given on the distinction between advice and guidance. Whilst we as an industry may feel we understand this, consumers do not.

Conclusions and solutions:

  • We need to make our industry easier to understand and engage with.
  • Larger firms are providing some financial education programs for people but this cannot solve the issue of poor financial education. This needs to start at school level.
  • Technology and social media can play a very important part in helping individuals understand financial issues and help reduce the cost of delivering advice to smaller savers.
  • Firms are looking at ways of dealing with the next generation in order to help retain family assets when they are passed on but this is still a smaller audience.
  • Simplification in the language used and clarity regarding advice versus guidance needs to take place to help people more easily engage with the industry.

Expert: Andrew Pike - NS&I

Facilitator: Martyn Laverick - Soprano Consulting


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