‘Trust is earned not given’

A recent report by Boring Money revealed that there is a lack of trust for financial advisers when compared to other professions in terms of trustworthiness, according to a recent report by Boring Money.

It showed a lingering lack of trust remains a barrier to greater adoption of financial advice in the UK. 

The average UK adult finds financial advisers less trustworthy than lawyers, police officers and priests, but they are more trustworthy than builders, journalists, fund managers and influencers.

It found that just 16 per cent of non-advised UK adults said financial advisers were one of the “most trusted” professions. 

The well-known phenomenon that trust is something we need to build could not be more accurate.

Yet this number doubled amongst advised adults, confirming that many who do seek advice have a positive relationship with their adviser.

Meanwhile, since 2021 the percentage of UK adults who said they would use a financial adviser dropped from 51 per cent to 42 per cent. 

At the same time, the percentage of people who said they would use social media for financial advice was on the rise during that time – up from 4 per cent to 10 per cent. 

The finding chimes with recent research from the Lang Cat, which concluded last month that if the profession takes action to improve trust it has the potential to double the number of people paying for advice in the UK.

This is startling, given there is a huge advice gap, and a need for financial education.

But the well-known phenomenon that trust is something we need to build, could not be more accurate.

Holly Mackay, chief executive of Boring Money, says the findings show that the advice gap remains “persistently high”. 

“Better technology can play a role in supporting advisers to help more customers. However, on the demand side, a key impediment remains the lack of trust, most notable amongst those who don’t have an adviser today,” she said. 

Boost consumer duty awareness 

The Financial Conduct Authority’s consumer duty is just around the corner and it seems not a day goes by without the new regulation being mentioned.

From conferences to Twitter and news stories, it is on the tip of everyone’s tongue right now – and rightly so.

The consumer duty is setting out to put consumers at the heart of everything that everyone in financial services does.

It aims to create fairness, transparency and competition. But do consumers know anything about this?

The FCA should turn its sights towards a campaign around making consumers aware of the regulation.

The answer is no. Unless someone is within the financial services sector, they do not really know what the consumer duty is or how it will impact them.

But shouldn’t they know about it? Wouldn’t that make the trust for financial advisers grow?

If consumers understood the lengths that financial advisers and firms in the industry were going to, in order to make everything more fair for them, I think they would be more trusting.

The burden of more paperwork, time, data – all of these which firms will be doing in order to comply with the duty and yet the end consumer knows nothing about it.

The irony behind this is real, given the duty itself is named after the consumer. 

So perhaps the FCA should turn its sights towards a campaign around making consumers aware of the regulation?

Given how much is expected for advisers to do in order to comply and the increased regulatory burden, it only seems appropriate consumers know.

All of this could lead to higher costs, either through the time and work required or extra staff members, so surely if these costs were passed on to clients then they should be aware of why?

In order to remain as transparent as possible – sticking with the FCA’s goals – it’s important for clients to understand why fees could increase in order to give them some satisfaction rather than assuming it is just to fill advisers’ pockets even more. 

It only seems fair that the end client is aware of the duty and all that is required in order to make the adviser-consumer relationship more balanced, transparent and overall more trusting.

Sonia Rach is deputy news editor of FTAdviser