Article

Financial advice for everyone

4 min read 12 Jun 24

You may be surprised to know that having a trusted financial adviser to help with your finances, perhaps over a number of years, is not as common as you may have thought.

Financial advice offers many benefits. From access to expert advice when you need it and a long-term plan to help you manage your money through life’s ups and downs, to added confidence and peace of mind. It has the potential to increase your wealth, and could change your life.

Yet according to consumer research, ‘The Advice Gap 2023’, only 11% of adults have paid for financial advice in the last two years. But importantly, 88% of them believe that the advice they received is good value for money.¹

To what extent do you believe the advice was good or poor value for money?

	Very good value for money	Fairly good value for money	Fairly poor value for money	Very poor value for money	Don't know/can't recall
Received ongoing financial advice	34%	52%	8%	2%	2%
Received one-off financial advice	34%	52%	7%	4%	3%

However, as the name of the report suggests, it is the 89% of people who haven’t paid for financial advice that are causing the advice gap.

In the last two years

Source: YouGov

The advice gap

The advice gap is the result of too few financial advisers in the UK and not enough people willing or able to access affordable financial advice in a way that best suits them.

"The advice gap must be addressed so that people have options to suit their circumstances. We want to enhance trust and meet people’s financial advice needs."

Ross Liston, CEO, M&G Wealth Advice

The report asks why bother to try to address the advice gap?

"Good advice is not about making it easier to buy an ISA, it is about improving financial wellbeing. Whoever you are, and whatever your level of wealth, gaining control of your financial affairs and accessing the peace of mind that comes as a result, is a huge benefit and one that should be attainable for all."

Why don’t people take advice?

The research looked in depth at the reasons why or barriers (perceived or real) that prevented people from taking financial advice. And thinking about your own experience, you might be surprised at some of the reasons.

Trust

One of the main reasons why people haven’t paid for advice in the last two years is a lack of trust. Being sure they could trust the advice was at the very top of the list of things that would need to change (38%) for them to take advice. And people also want to feel they can trust the person giving the advice, as well as the organisation behind it.

What would make you pay for financial advice?
I would need to be sure I could trust the advice	38%
I would need to be convinced it would save me money	37%
I would need to earn more money than I do now	27%
I would need to be sure how to pick the right adviser	24%
Financial advice would need to cost less	20%
Organisations who offer financial advice would need to be easier to find	5%
Not applicable - I would never pay for financial advice	29%

Awareness

Another key challenge for people is awareness. They may not understand the value of advice and how it could benefit them, or even how to find the right adviser. Of those who haven’t paid for advice in the last two years and are unlikely to do so in the future, over a third (37%) said to encourage them to pay for advice they would need to be convinced it would save money. This is up from 33% in 2021. In addition, a quarter (24%) said they would need to be sure how to pick the right adviser, rising from 22% in 2021.

Recommendation

If you have taken financial advice, think back to how you found your adviser. A friend, family member or colleague may have recommended them to you. Or you might have been referred by an organisation, such as your pension provider. The report found that 42% of people who paid for advice came through a referral – such as a friend or family, another organisation or another professional.

Sources of information for those who received free or paid specialist financial advice
Through my own research	35%
It was recommended by a friend, family member or colleague	25%
I was referred by another organisation that I approached for help	13%
I was referred by another professional	4%
Other	17%
Don't know / can't recall	6%

Recommend your adviser

Referrals are key when it comes to overcoming the question of trust, as people are more likely to seek financial advice if the recommendation comes from a source they already trust. You may already have done so, but if you’ve had a good experience with your adviser and the recommendations they’ve made, then you could recommend them to your family, friends or colleagues. You may have benefitted from saving money, improving your tax position or just making your investments work that bit harder. Whatever it is, you’re in the best position to tell your friends about the service and trust you’ve built with your adviser.

"If you’ve really appreciated the help your adviser has given you in managing your money, think about telling your friends and family. This will mean more people can benefit from advice."

Ross Liston, CEO, M&G Wealth Advice

Trust is critical and more must be done to improve the perception of advice and the real benefits it helps bring to people’s lives.

How to address the advice gap

The research highlights several key findings, perhaps most important of all, the need for the financial industry as a whole, to work together. It recommends:

education
more options for people to access financial advice in a way that best suits their circumstances
developing innovative technologies to deliver increased value for money
offering a range of advice options
increasing numbers of financial advisers
encouraging recommendations

The report specifically recommends encouraging referrals. So if you’ve personally benefited from financial advice why not recommend your adviser to family and friends, if you’ve not already done so. This would help them find a trusted adviser.

You can download and read The Advice Gap 2023 from The Lang Cat.

¹The Advice Gap 2023, The Lang Cat