Money

Financial advice can make a real difference – so why aren’t more people accessing financial help?

5 min read 8 Aug 23

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Summary

Recent research from the 2023 Advice Gap* report, shows that people face a number of financial and emotional barriers when it comes to getting advice. But are these barriers based on perception or reality? There are many misconceptions about financial advice which could prevent people from seeking help, even though it could make a real difference to their financial future.

This article explores some of the findings from the Advice Gap report and discusses ways to overcome potential barriers.

What is financial advice?

Financial advice involves looking at your personal circumstances and tailoring financial recommendations to your needs. A financial adviser will generally ask you detailed questions about your savings and goals for the future, then help you put plans in place to achieve these goals. Not only does this make good financial sense, it can also have emotional benefits for example, knowing loved ones are protected, feeling a sense of financial security and helping with financial confidence.

Despite this, according to the Advice Gap report, only 11% of adults have paid for financial advice in the last two years. Out of those who spoke to the experts, a staggering 88% believe that it represents good value for money. So, why aren’t more people accessing advice?

The cost versus value of advice

It’s understandable that cost is always a factor when looking at any professional service. And people need to look at whether they can afford it or not. But the report findings show that some people who are able to afford financial advice still perceive ‘cost’ as a barrier, when in reality it isn’t.

Taking this into account, it might be better to think about it in terms of value rather than cost. For example, the savings that could be made by having an effective estate plan in place for your loved ones (perhaps saving a hefty Inheritance Tax bill that would otherwise go to the government) or investing your hard-earned savings in a tax-efficient way. When you think about the value that the right advice could generate versus the cost of that advice, it might change your perspective.

Is advice just for the wealthy?

A common barrier that prevents people from getting advice is the age-old misconception that financial advice is only for the rich. But the world of financial advice has changed dramatically over the past few years. Technological advances have brought new ways of offering and accessing advice, at a range of costs. It’s no longer a ‘one size fits all’ situation. Plus, many of us are more comfortable with digital solutions after Covid-19, when face-to-face interactions were off-limits.

The three main ways to access advice are Robo advice, which is usually a low-cost digital service that uses technology to automate investing. Hybrid advice, which combines automated digital tools with oversight by a financial adviser. And then probably the best known, Traditional advice, which involves a financial adviser talking you through your needs and recommending a plan. Because traditional advice is tailored to you, it’s usually more expensive than Robo and Hybrid advice.

You can read more about each of these types of advice and decide which one might be right for you.

If you genuinely can’t afford any type of financial advice, it doesn’t mean that there isn’t financial help out there. Many websites and organisations offer free guidance services and information on a wide range of financial topics, for example, the Citizens Advice Service or MoneyHelper. Guidance provides you with information about the various options available to you but shouldn’t recommend any particular option over another. Guidance isn’t regulated and its aim is to ensure you have the facts, so you can make an informed decision yourself.

Putting your trust in a financial adviser

Putting your trust in someone to manage your money is a big decision and it might seem daunting. But it’s important to remember that this is a professional service – all financial advisers are regulated by the Financial Conduct Authority and have to reach a minimum standard of qualifications. You can check if an adviser is on the Financial Services Register which lists all the firms and individuals authorised or registered by the FCA.

If you’re unsure where to start when looking for an adviser, asking friends and family for recommendations can be really helpful. It’s often easier to trust someone when you know people who have had positive experiences and would recommend the service. It also makes sense that someone who’s had a good experience and benefitted from advice will want to ‘spread the word’ – and this is something that we see in the research, with referrals accounting for two-fifths (42% of respondents).

You can also look online at many sites like Trustpilot or VouchedFor that publish recommendations or feedback on financial advisers.

Build your confidence

Use an adviser to improve your money confidence – financial matters can be complex, especially when it comes to retirement options or estate planning, so it makes sense to use a specialist to help you manage your money more confidently. And having your finances in order can help give you peace of mind and a greater sense of confidence in your financial future.

Don’t let barriers stop you from getting the help you need

The Advice Gap report found that there are many people that miss out on the benefits of advice because they don’t know where to get it, who to get it from, or even that it exists.

Talk to friends and family, do research and look at your options. Financial advice really can make a big difference.

If you haven’t already got a financial adviser and would like to speak to someone, you can find an adviser here.

* The 2023 Advice Gap report, sponsored by M&G Wealth, is an in-depth study into the drivers behind people taking advice and, perhaps more importantly, the barriers that prevent the majority of the population from doing so.