Your IndustryJan 22 2016

Advice snubbed as gap continues to widen

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Advice snubbed as gap continues to widen

Traditional advice models are not only being shunned but millions of investors are making their own financial decisions in the ever burgeoning advice gap.

Research from Boring Money concluded that 8.4 million 34 to 44 year olds are not taking financial advice, with only

10 per cent holding a stocks-and-shares Isa. They are more likely to listen to social peers and, of those who recently purchased a financial product, none had used an adviser.

The Treasury-commissioned Financial Advice Market Review (FAMR) will introduce proposals in the spring designed to tackle the issue and Andy Hillier, IFA at Salisbury-based Castlefield Advisory Partners, feels that simplicity is the key, “We need to work with our regulators to provide very focused documentation for clients to enable them to understand the impact of charges and investment risks, so a fully informed choice can be made by the client,’’ he said.

He added that, given the complexities of tax allowances, retirement options and market volatility, advice has never been more important.

Meanwhile a MetLife survey indicated that advisers are feeling the strain with 68 per cent saying costs outweigh returns while 52 per cent fear regulation and risk is alienating the less wealthy.

This correlates with research conducted with consumers, as a third believe advice is too costly and 31 per cent undertake decisions themselves.

Worryingly, 50 per cent of over-65s believe they do not need advice and pension scammers could be seizing the opportunity by claiming to offer free retirement solutions.

A nationwide campaign group, ACA Pension Life, has been set up to rescue victims of these scams, who have already seen losses totalling in excess of £2bn. The thieves tempt investors by claiming a ‘legal loophole’ enables tax-free access before age 55 and suggest the victim is too sophisticated for traditional assets. Mr Hillier has seen an increase in retirement planning enquiries, but added, ’’Unfortunately, clients often have to experience the advice before they see the benefits.’’

craig.rickman@ft.com