It’s well documented that three-quarters of UK adults currently fall into the advice gap. What’s perhaps a little less known is that, within this population, there are 3.7m people who not only have significant assets to invest – but are also open to receiving professional financial advice.
Last year, Royal London estimated that the size of this unmet demand accounts for over £185bn of unadvised investible assets.
While this sounds like the perfect opportunity for advisers, connecting these people with advice isn’t such an easy problem to solve. Indeed, many don’t know how to find an adviser, while others need a little more education about the benefits before they’d be willing to take that first step.
But, even if we’re able to overcome these issues, there simply isn’t enough capacity in the adviser market to take on such a potentially significant volume of new clients.
What advisers think
In our latest research paper, Let’s shape the future of advice, Royal London has sought the views of the advice community on the steps our industry must take if we’re to connect more people with their support.
Unsurprisingly, advisers recognise that we must do more to educate people about the benefits of advice if we’re to encourage more of them to seek it.
What’s possibly more interesting is that while most advisers believe that this is something that would benefit potential clients, only a small number of firms currently offer this type of support. Clearly this is an area where our industry can be doing more to help champion the role advisers can play in delivering better financial outcomes.
Technology is also central to this debate. It’s used to create efficiencies in every aspect of our lives these days – so it’s destined to play a key role in any solution that’s designed to narrow the advice gap. The question we need to answer is how we can effectively use technology to help make an adviser’s services more scalable, while ensuring there’s no detriment to the customer outcome or experience.
Some advisers believe automating key parts of the advice process would help to increase their capacity – but the overwhelming majority remain sceptical as to whether self-serve solutions like robo-advice will ever be able to provide a replacement in its own right.
Perhaps a more obvious way to increase the capacity of the advice market would be to increase its size. And almost half of the advisers we spoke to believe there’s a need to encourage more people to enter their profession if we’re to help meet consumer demand both now and in the future.
What’s clear from all this is that, if the ambition of our industry is to build an environment where more consumers who want or need advice are able to benefit from it, collective action is needed.
Now is the time for positive conversation. And this responsibility must be shared by providers, advisers, regulators and government if we’re to have any chance of reaching those consumers who will otherwise be left behind.
