SMEs are falling through the cracks of financial advice

Bethany Rutter

New research shows something is going very wrong in small- and medium-sized enterprises (SMEs).

Research from Bibby Financial Service, which is the UK’s largest independent invoice finance provider, found that nearly a quarter of 1,000 SMEs it surveyed trust friends and family the most when seeking advice on business. Financial advisers lagged behind on 18 per cent, not far ahead of the ever-trustworthy internet, which came third on 14 per cent.

The fact that when asked which resource they used for advice the most often it was the internet that came out top only adds to the cultural problem. The worst part, however, is that 52 per cent of SMEs said they actually prefer to receive face-to-face advice... so what’s going wrong?

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SMEs cannot afford to be without solid, professional financial advice, but it is clear that many are avoiding it. According to research from Bright Grey, one in 10 workers will experience being ill for six months or more during their working lives. Illness doesn’t discriminate between those who work in smaller business and big corporations with good financial protection, so inadequate advice could leave companies badly exposed.

If the motivation of any business is to turn a profit, it is almost inconceivable that so many do not take preserving their financial situation seriously.

From the sounds of things, SMEs prefer face-to-face advice and yet aren’t getting it in any useful or meaningful way. With staging dates for small- and medium-sized companies to implement auto-enrolment coming closer and closer, they will need all the help they can get. Friends and family cannot provide the kind of advice and guidance they need, by any means.

Corporate advice seems like a largely untapped market for advisers and yet at times like this it shows itself to be desperately needed. Perhaps advisers need to be more proactive in making SMEs understand there are certain challenges they cannot face alone, while SME-owners need to undergo a cultural shift in seeking guidance from the right places.