Most UK adults fail to seek regulated financial advice because they believe it to be “too expensive” and “for the wealthy”, according to new research.
Some 55% of those surveyed believed that paying for financial advice is just for the well-off.
The Financial Services Compensation Scheme research revealed that two-thirds of adults with savings, investments or a mortgage have not sought regulated financial advice in the last five years.
More than one in five of those who used free guidance, rather than regulated advice, said they did so because they believed regulated advice was “too expensive.”
The FSCS said there was a greater need to understand the differences between the types of advice and guidance available, so consumers can feel confident about making responsible decisions with their money.
Young people between the ages of 18 and 34 were most likely to agree that it should be easy to invest without needing professional financial advice.
More than half of UK millennials and Gen-Z with financial products agreed that they can find good financial advice online, and almost half of Gen-Z believed they can source good financial advice on social media.
However not seeking regulated advice, or instead following tips from unregulated and unsuitable sources, could put UK adults at higher risk of putting their money somewhere that is not safe, the FSCS warned.
Caroline Rainbird, chief executive of FSCS, said: “The financial ‘advice gap’ is a concern for FSCS, particularly as scammers will prey on peoples’ fears and exploit any gaps in their financial knowledge, putting them at greater risk of making poor decisions about their money.”
Yet, encouragingly, the new findings also show that among those UK adults that have taken paid for regulated financial advice, 62% said that if they needed financial advice for a similar reason, they would use the same service from the provider they used before.
Ms Rainbird added: “At FSCS we see the impact of poor advice every day. It results in millions of pounds each year disappearing from consumers’ pockets. We can only offer protection on financial products and services that are regulated.
“It is important for people to be fully aware and confident about the decisions they are making with their money and the risks that come with taking guidance from unauthorised sources.”
• Research conducted by Ipsos UK on behalf of FSCS, interviewing a representative quota sample of 2,000 UK adults aged between 18-75 using its online FastFacts platform between 10 and 13 August 2022.
