While this may be the case for some, most financial advisers will know this is far from the truth. In fact, it is probably more necessary for those without that abundance of wealth in order to manage their money more efficiently.
I for one am a strong believer that financial advice is a need and not a want.
Everyone needs advice, but unfortunately in the current circumstances of the industry, not everyone can afford it. This is why we as an industry, as well as the regulator, need to step up and move fast.
Guidance
In recent weeks, the advice guidance boundary has been making headlines.
In a speech by Sarah Pritchard, executive director – markets at the Financial Conduct Authority, in September, she said one area the regulator is looking at transforming is the advice and guidance rules.
A month later, the FCA said it was working with The Investing and Saving Alliance and the Association of British Insurers to try and gain some practical examples of areas where the advice and guidance boundary is not working.
At the time, Pritchard said she wanted to make it clear that the legislation around the advice and guidance boundary “is not going to change for the time being”.
More than 70 per cent of customers do not even consider saving in an Isa. One of the key reasons was that people thought the product was not for "people like me". “What we have said is that we want to have a holistic review of the boundary between advice and guidance because this is an issue that has been raised over a number of years,” she said.
Following that, earlier this month Tisa called on the government to urgently review the legislative framework around firms’ permissions to deliver financial guidance to consumers.
In a report titled "The keys to unlocking greater investment in stocks and shares Isa", it found that while information exists around stocks and shares Isas and the savings options that consumers have, more than 70 per cent do not even consider saving in an Isa.
One of the key reasons was that people thought the product was not for "people like me".
Tisa said prompting more people to consider these Isas could result in several benefits, such as facilitating levelling up across disadvantaged areas, reducing the gender gap and facilitating social mobility.
All of the above, specifically Tisa’s research, combined with the recent economic turmoil with interest rates, is a clear demonstration of why advice is a necessity.
Vicious cycle
So what exactly is the problem? Well, it’s the domino effect.
There are not enough advisers to go around which therefore means those that are there can take on fewer clients and are selective with the minimum amount a client needs to invest. After all, it is their livelihood.
This then has a knock-on impact as it rules out small time consumers, who need some form of advice but do not have enough money to seek it.
Many large firms and industry bodies are operating academies and ways to encourage young people into the profession.Clarifying the advice-guidance boundary seems to be a great place to start but the regulator really needs to press ahead with it as a priority.
With the cost of living crisis, soaring interest rates and house prices at an all-time high, the need for some help is urgent.
For some consumers, they want and need advice but can’t afford it. For others, they don’t even know what it is, proving yet again why they need it.
Solutions?
As an industry, we need to get creative so that advisers can get in front of those people.
A short-term solution would be for advisers partnering up with companies and get in front of those consumers. This could be by offering some free, basic 'guidance' or perhaps providing general personal finance guidance through a pension chat.
Other means could be a webinar, a YouTube page or something of that nature that allows people to seek guidance from a regulated individual versus a random finfluencer selling cryptoassets.
Now of course, the above could help but it is ultimately only a short-term solution.
The long-term solution would be to get more advisers into the industry.
Only 426 advisers in the UK are under the age of 25, compared to 4,824 who are over the age of 60 and thinking about retirement.Many large firms and industry bodies are operating academies and ways to encourage young people into the profession, but it is still a largely untouched industry.
A recent freedom of information request by my colleague to the FCA revealed that 74 per cent of the 31,144 individuals authorised to provide retail investment advice were over the age of 40 and a mere 8 per cent were under the age of 30.
In addition, only 426 advisers in the UK are under the age of 25, compared to 4,824 who are over the age of 60 and thinking about retirement.
She questioned whether the advice profession is heading towards a capacity crunch. I think so.
If things continue how they are now, it is likely there will be many more advisers retiring in the years to come than there will be younger advisers to replace them.
And therein lies the problem.
As an industry, we need to do more.
And what better time to shout than when people need the most help amid a cost of living crisis?
Sonia Rach is deputy news editor of FTAdviser
