'Independent advisers are beneficial for most of us'

The co-founder of money management app Hyperjar says regulated financial advice could benefit "most" people and help with their medium to longer-term planning, as well as debt reduction.

But one area that is particularly underserved and could have the biggest impact is people’s spending, he says.

In a Q&A with FTAdviser Megens explains where people are being hit the most by the rising cost of living and the role advisers play in helping people through it.

The financial world is only getting more complicated and if everyone had the right helping hand it could make a big positive impact on society

FTA: When it comes to managing the cost of living, where do you see people struggling the most?

MM: The hardest thing is when the cost of necessities like groceries, utilities and rent increase faster than our income.  

For those who’ve had to renegotiate mortgages it’s been a shock to the system, having to find hundreds of pounds a month extra.

Our customers’ shopping habits have definitely shifted. So for example, we’ve seen a trend away from high and mid-market supermarkets to Aldi and Lidl, with more frequent but lower basket spends.

And we’ve seen a big increase in use of our discounts and cashback rewards as people need and see the benefits of getting more for their everyday spending.

FTA: Is there enough help out there for the average earner?

MM: It’s complicated. Many would argue that inflation is exacerbated by too much government support. However, sometimes competitive forces don’t work efficiently enough to keep prices fair.

If governments can monitor those dynamics and allow consumers to have visibility on costs of services and allow easy switching it can make a big difference.

An important part of Hyperjar’s mission is to highlight the importance of spending – by far the biggest ‘asset class’ for most people. The average person in the UK spends more than £1.2mn in their lifetime, so managing that spending well is critical to our financial position.

FTA: What is the easiest way to reduce regular expenditure?

MM: There are simple things most people can do that can have a huge impact:

• Look at monthly bank statements and check for any unwanted, repeated or unused subscriptions then cancel them.
• Check your supermarket spend and eliminate waste.
• Be mindful of the small amounts you spend: £5 a day on things like coffee and snacks is £1,800 a year – or £73,000 over 40 years. That’s around twice the average private pension (£37,000) we retire with.

FTA: How might regulated financial advice benefit average income households, especially during the current crisis?

MM: Regulated financial advice could help greatly for medium to longer-term planning. Things like mortgages and investments or what to do with a bigger pool of money.

If someone has debt, strategies to reduce or consolidate that can be extremely beneficial.  

An area I’ve mentioned that is unregulated and underserved but can probably have the biggest impact is people’s spending.  

Small amounts wasted or saved daily can have major effects over a lifetime. There’s a great book by US author Andrew Tobias called The Only Investment Guide You’ll Ever Need, and a good chunk of the book is devoted to spending well and wisely before even thinking about investments and more complex financial products.

FTA: Do you think advisers have a role to play in helping more people manage their money better?

MM: I do think the financial sector is overly complex and expert independent advisers are beneficial for most of us.

The financial world is only getting more complicated and if everyone had the right helping hand it could make a big positive impact on society.

FTA: What could advisers do in practice to provide meaningful help to people, bearing in mind that they too have a business to run and have a huge compliance burden for any regulated advice?

MM: I think the most important question is how do you compensate an adviser for their time.  

If it’s a private market, there will be people not able to afford it. If it’s paid for by commission on products, there will be possible questions regarding conflicts of interest. If the government or a charity plans to fund advice, there might be concerns around quality and integrity.

In truth, there are a small number of simple actions people need to follow to avoid the biggest trouble.

If this could be studied and agreed, it might be as simple as providing this guide and letting an adviser understand someone’s unique situation to help them tailor the advice.  

This might make the process less costly and thus scalable to reach the greatest number of people.

FTA: Have there been any interesting developments lately that might signal how technology could help the broader masses manage their finances?

MM: Tech has a huge role to play and is probably the best first step for those looking for help and structure before bringing in a human adviser.

At the most basic level – and the thing that will likely have the biggest impact – is looking at income and outgoings and see how to maximise what people are getting from every penny spent.

Switching to own-label groceries can save £500 a year. Haggling on things like broadband and mobile contracts can save hundreds.

Making sure you’re accessing all the cashback, discounts and vouchers available can make spending money go a lot further. There are a small number of actions that can create huge benefits. 

carmen.reichman@ft.com