One in three of us could be missing out on making the most of our money and assets by not seeking financial advice. Of people that don’t access financial advice, 36% have at least £10,000 in savings and investments, according to the Financial Conduct Authority (FCA). It’s a sum that signals they could benefit from professional advice, the organisation says.
It means that some 18.2 million people may be failing to access advice that maximises their wealth. In fact, just one in 10 (9%) UK adults, or 4.5 million people, have sought regulated financial advice in the last 12 months; although the figure represents a rise from 6%, or 3.2 million, last year.
The FCA report suggests that there’s a clear demographic of those that seek advice, with many that fall outside of this missing out. Of those that have sought advice in the last 12 months:
With this in mind, what’s stopping people from accessing financial advice that they could benefit from? The FCA survey found many reasons were to blame.
However, just one in seven (15%) mentioned affordability as the key barrier to accessing advice. Rather than associated costs, respondents were more likely to be concerned about getting value for money and whether an adviser would be acting in their best interests.
The top reasons for not seeking advice were:
The core reasons for not seeking advice reflects in consumers’ willingness to seek advice in the future if they felt like they needed it. 13% anticipated that they would definitely take regulated financial advice in the future. A further 40% said they might; with many clarifying a significant change in their financial circumstances would drive them to speak to a financial adviser.
Even among those seeking financial advice, there’s a shift in how and when they access it. With financial advice covering a vast range of areas, consumers are keen to make the process suit their needs. The findings suggest consumers are moving away from the standard annual review model. Of those who accessed financial advice in the last 12 months:
When asked what they’d discussed in their last advice sessions, there were two clear areas; pensions (67%) and investments (44%). Pensions and investments are complex areas to get the most out of and that affects the majority of people at some point in their lives. As a result, the responses further highlight how financial advice can support those who are failing to access it.
The FCA findings revealed the top drivers for seeking advice are:
Failing to seek advice can mean missed opportunities. From making a choice that hasn’t fully assessed all the other alternatives through to taking no action at all.
The FCA findings make it clear that investments are an area that consumers are most likely to seek advice on. In the last 12 months, 23% have changed the funds or assets in an investment, with 17% acting on advice. Likewise, when taking out a Stocks and Shares Individual Savings Account (ISA), three quarters did so on the advice of a financial adviser.
However, there were other areas where consumers were more likely to take action without the support of financial advice, including, paying off some or all of their mortgage, taking out a Cash ISA, and increasing monthly payments into an investment. While some of these consumers may be knowledgeable enough to make these decisions, others may be missing out on alternatives they hadn’t thought of or discounted.
The FCA findings also found that almost a quarter (24%) of people took no action at all. While the report can’t reveal if these people missed opportunities, it’s likely that at least some of them have. Not taking any action can be just as costly as making a wrong choice.
Changes in your personal circumstances and the wider market means that financial planning should be regularly assessed to ensure it’s still the best strategy.
Financial advice gives you a chance to assess the opportunities that are open to you, creating a way forward that matches your current situation and aspirations. To speak to one of our financial advisers, contact us today.
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