A new survey suggests that potentially 3.1m more people would consider paying for financial advice but many are held back by a lack of trust.
Seven in 10 people who declined to pay for financial advice in the past two years say they are unlikely to pay for it in the future, according to the lang cat’s Advice Gap 2023 report.
Despite the reluctance of many to pay for advice, those that do pay said they were pleased with what they received and the survey suggests over 3m more people would consider paying for financial advice if trust and affordability issues were tackled.
The majority (88%) of those who take ongoing financial advice said it represented value for money, with a similar figure (86%) for those who had received one-off advice.
When asked what should be done to help close the advice gap, 42% of advisers said cost or profitability issues need to be tackled to make advice more affordable, while 25% cited the cost of regulation as a barrier.
Almost three-quarters of advisers surveyed said the FCA’s recent paper on broadening access to financial advice on investments (CP22/24) will have no effect due to the core demographic groups identified as potentially open to using financial advisers unlikely to be commercially viable (42%).
Mark Barrett, consulting director at the lang cat, said that perception was a big issue for the advice sector.
He said: “The Advice Gap has never been a simple question of who is and isn’t taking advice. If things are to change, it is vital to understand what drives people to take advice, and what prevents them from doing so. Affordability is clearly a big part of the problem, but it’s not the only issue – there is a lot more that could and should be done to improve the perception, availability and accessibility of advice.
“Whilst those who do pay for advice believe they received good value for money and trust their adviser, there’s a distinct lack of trust among those who do not. The perception gap is a big issue for the advice sector, and if addressed, 3.1m more people would potentially pay for advice.
“This can only be addressed by a collective voice – providers, trade bodies, regulators and advisers all have a role to play to improve the perception of the advice sector.”
Ross Liston, advice CEO of M&G Wealth, said that more people needed to be encouraged to consider financial advice as a career if the advice gap is to close.
He said: “Trust between client and adviser is a prerequisite for successful Financial Planning. But the crux is that relationships have to be found and formed in the first place. We need to encourage more people to plan for better financial futures than ever before and we need more advisers throughout the industry to serve them and deliver the best experiences and Financial Planning that they need.
“This straddles education and opening up as many options as possible for people to access financial advice in a way that best suits their circumstances.
“We are not alone in investing heavily to do this – in technology to deliver increased value, financial education, a range of advice options and increasing our numbers of financial advisers. It is critical that the industry works as one to deliver this.”
• The lang cat and YouGov surveyed 2,035 British adults online between 13 and 14 February.
