Increased access to advice and guidance for all consumers was a main theme of the Financial Advice Market Review recommendations.
Now, 15 months after the FAMR recommendations were made, the Financial Conduct Authority has revealed how it will assess whether the measures resulted in more people being able to get help with important financial decisions.
Here are the five key takeaways for you from the 48-page report on the Financial Advice Market Review published by the FCA today.
1) Advice is now for the few
The FCA’s quantitative research showed that 6 per cent of UK adults (or 3.2 million people) received financial advice on investments in the last 12 months.
Just under half (45 per cent) of those who have not received advice in the last 12 months report that they have had regulated financial advice related to investments, saving into a pension or retirement planning in the past.
However, the regulator claimed these figures may not represent the true number that have received advice in the past, due to respondents’ imperfect recall and limited understanding of regulated investment advice which result in a risk of overestimation.
A quarter (26 per cent) of all UK adults used at least one form of guidance or information in relation to investments, saving into a pension and/or retirement planning in the last 12 months.
Around a quarter of consumers who had not received advice had used guidance or information to help with similar financial decisions.
Most people using information or guidance were doing so in relation to investments, with 14 per cent purchasing an investment with a lump sum as a result of the information or guidance they received, 9 per cent starting or increasing monthly payments into an investment, and 9 per cent changing the funds or assets in an investment.
2) Robo-advice is for the even fewer
Just 3 per cent of those who had received regulated financial advice in the last 12 months related to investments, saving into a pension or retirement planning had received automated online advice.
According to the FCA this is a low figure and “is to be expected given the embryonic nature of the market.”
Although small sample sizes mean that it is difficult to make any definitive statements about those who are using this particular channel, the FCA said there is an early indication that 18 to 34-year-olds are likely to be the early adopters.
3) FCA will finally take a snapshot of industry
The regulator confirmed in the paper that it will finally measure the advice industry.
The FCA identified a range of indicators to give a snapshot of the market for financial advice and establish a baseline to allow it to monitor developments and assess if the Financial Advice Market Review have made any difference.
A review of the outcomes of the Financial Advice Market Review is planned for 2019.
On the demand side, the watchdog will calculate how many consumers use advice and guidance and grasp what are the different channels they use. The watchdog will ask why some people are not taking advice and assess consumers’ willingness to pay for advice.