Research from Aegon has revealed UK consumers are reluctant to pay for advice until they have an investment or pension pot totaling nearly £121,000.
However, this figure comes in at four times the £30,000 that advisers believe is required to make advice worthwhile.
Aegon commissioned One Poll to survey 2,000 consumers and Censuswide to survey 250 financial advisers during September.
The study found that just 6 per cent of the adult population agreed with the adviser community that a savings or pensions pot of £30,000 is worth paying for advice on.
When it comes to how much the UK is willing to spend on advice, there is little correlation between the value of the assets and how much people are willing to pay.
Faced with deciding where to invest £50,000 people are willing to pay, on average, £191 for advice.
However, when it comes to deciding where to invest a pot of £250,000 people are willing to pay £314, just £123 more, despite the pot being five times bigger.
There is also a difference of opinion on the main benefit of taking advice, with 42 per cent of consumers believing the potential to grow their investments is the biggest advantage, followed by a third preferring the peace of mind that they have been advised by an expert.
However, it is peace of mind that advisers see as the main benefit for consumers, both in the knowledge that consumers have been advised by an expert (63 per cent) and also the consumers’ right to complain to the Financial Ombudsman Service if they are unhappy (42 per cent).
Duncan Jarrett, managing director for retail at Aegon UK, said there is a significant gap between what consumers believe they need to have saved before they seek advice and the amount advisers believe is required to make advice worthwhile.
“The government’s consultation on methods of extending advice needs to look at ways of re-framing consumer thinking.”
He used the example of annual servicing on a car as it gets older in order to spot potential problems early. “While it involves a regular cost, it could pay you back many times over if it prevents a major expense at a later date,” noted Mr Jarrett.
“The same is true of advice, when people understand that the cost is potentially securing them a much more comfortable retirement or removing a major worry, then the value becomes apparent.”
Aegon’s study comes after back in August website Money.co.uk commissioned One Poll to survey 669 over-55 year olds with a pension and found that just one fifth would be willing to pay for it, dropping to just 13 per cent of men.
On average, those planning to make a withdrawal from their pension said they would be willing to pay just £253 for financial advice.
peter.walker@ft.com
