Pensions - Articles - Top 6 misconceptions that fuel the advice gap


Long held misperceptions are fuelling the UK’s advice gap with an estimated 9.4m people choosing not to look for an adviser despite being open to the idea of financial advice according to Royal London.

 The UK’s largest mutual life and pensions provider gathered views from over 4,000 customers and has identified six common barriers that stand in the way of people accessing financial advice.

 1. It’s too expensive
 This is the biggest barrier to advice covering 47% of non-advised consumers. However, despite believing professional advice costs too much, a sizeable number (40%) admit they have no expectation as to what an adviser might charge.

 2. I can look after my own money
 More than one in three (35%) of non-advised customers think advisers can’t offer them anything that they can’t do themselves. This contrasts with previous Royal London research which shows advised customers not only feel more informed, they are also financially better off by more than £47,000 over a ten-year period than their non-advised peers.1

 3. It isn’t for someone like me
 15% of non-advised customers feel their finances are either too simple or that advisers are only interested in customers who are wealthier than them. However, 31% of this group have more than £50k in investable household assets and so could benefit from speaking to a financial adviser.

 4. I don’t trust advisers
 29% of non-advised customers feel they can’t trust an adviser – or they don’t know how to find a good one. However, 27% said they would be likely to see an adviser once they had been given more information about the services on offer.

 5. It isn’t something I’d thought about
 Almost a quarter (22%) of customers have never sought professional financial advice because they simply haven’t considered it as being something they might need.

 6. I don’t like talking about my money
 Almost one in five (17%) of non-advised customers are either too proud or embarrassed to talk to someone about how to manage their finances. 32% of all non-advised customers say they would be more likely to seek advice if they could do everything digitally.

 The research has also found the advice gap can be broken down into four distinct groups:
  
 • Professional Advice Gap - The people in this group represent the biggest immediate opportunity for advisers with 54% saying they’re open to receiving professional financial advice. This population have among the highest levels of household income averaging at £48,000 and investable assets of £87,000.
  
 • Self-sufficient Gap – This group is the most confident when it comes to looking after their money with a massive 94% feeling in control of their finances. These customers have the most diverse product holdings and the greatest level of investable assets with almost a quarter (22%) having more than £250k.
  
 • Guidance Gap - This group are the most likely to feel anxious about their money and they worry the most about being able to cope financially when they retire. Average income for this group is £34,000 with investable assets averaging the same amount.
  
 • Disengaged Gap – This group has the lowest average level of income (£33,000) and the smallest number of product holdings. They have little awareness of their own financial situation and are among the least likely to seek professional advice.
 The provider believes that by focusing on each group separately, the financial services industry can collaborate and make sure everyone is able to access the right level of financial support. Whether that be free financial guidance, fully regulated advice, or a combination of both.
  
 Commenting on the research Royal London’s director of policy and external affairs Jamie Jenkins, said: “The advice gap is undoubtedly one of the biggest issues we face as a nation when it comes to people getting their finances in order. This is particularly the case over the last year when so many people have faced a multitude of challenges in their lives.

 “While some people are unable to access advice, this research shows there are potentially more than nine million others who could be seeking professional financial advice who aren’t. This is often down to misconceptions around cost and misunderstanding around what they can expect from an adviser.

 “As long as these misconceptions exist these people are missing the opportunity to build a sustainable financial plan that safeguards their present and future. As an industry we must look at how we can break down these misconceptions as well as helping advisers to scale up their business so they can offer support to more people.”
  

Back to Index


Similar News to this Story

Latest Pensions Dashboards programme update
Kate Smith, Head of Pensions at Aegon, comments on the third Pensions Dashboards programme progress update report and staging timetable of pension pro
Aon says UK pension schemes showed their resilience in 2020
Aon has said that the events of 2020 demonstrated the resilience of UK pension schemes.
TPR welcomes new rules to scupper pension scammers
The Department for Work and Pensions has today (Friday 14 May) published for consultation new regulations under the Pension Schemes Act 2021 that will

Site Search

Exact   Any  

Latest Actuarial Jobs

Actuarial Login

Email
Password
 Jobseeker    Client
Reminder Logon

APA Sponsors

Actuarial Jobs & News Feeds

Jobs RSS News RSS

WikiActuary

Be the first to contribute to our definitive actuarial reference forum. Built by actuaries for actuaries.