Foster Denovo  

Third of people feel financial advice costs too much

Third of people feel financial advice costs too much

A third of people shun financial advice because they believe it is too expensive and one in 10 believe advisers can't be trusted.  

A survey of 2,002 people aged 20 to 55-years-old conducted by Foster Denovo found a third of respondents would rather seek financial advice from friends and family than a professional adviser.

The research identified cost as a major factor in the choice, with 34 per cent of respondents claiming they did not seek professional financial advice because it was "too expensive".

Roger Brosch, chief executive of Foster Denovo, said this attitude is linked to the introduction of the Retail Distribution Review in 2012.

The Retail Distribution Review resulted in the removal of adviser commission, which back in 2016 the FCA admitted had widened the advice gap.

Andrew Bailey, chief executive of the Financial Conduct Authority, said while the RDR achieved the objective of removing opaque charges and raising professional standards of intermediaries, it caused advisers to pull away or make their service too expensive for one-off or limited advice.

Mr Brosch said Foster Denovo's research suggested robo-advisers had taken steps to close the advice gap by bringing more affordable solutions to the market.

The survey also found 14 per cent of respondents shunned professional advice because they did not trust advisers, a figure Foster Denovo suggested highlights the size of the task faced by the industry in "proving its worth".

Mr Brosch said he found many of the findings concerning but not necessarily surprising.

He said: "Sound advice is key to a secure financial future and it is encouraging to see that many of those who have sought advice, agree with this sentiment."

Of the survey’s respondents, 72 per cent of those who sought professional advice said it had improved their finances.   

Mr Brosch said: "In our view, particularly for the important life decisions, there is no substitute for professional financial planning.  

"Our sector will only truly thrive when we are able to engage and implement effective intergenerational planning, and that requires us to constantly innovate and adapt to the changing needs of younger clients who will wish to interact differently in future."

Mr Brosch said the industry must respond to the challenge positively and proactively, building the bridge that will support high quality financial planning now and for future generations.