A growing acceptance of remote advice delivered through digital services is putting pressure on face-to-face advice, as clients look for lower fees and increasingly move away from the traditional set up.
Boring Money’s 2021 Advice Report, published today (May 12), found the number of people happy to receive advice via video had doubled, from 25 per cent in 2019 to 49 per cent by April this year.
Boring Money asked 8,760 people and found many would move away from the more traditional advice set up if it meant they could lower their fees.
Among those surveyed, 40 per cent said they would favour paying a lower fee for digital advice, and 29 per cent said they would prefer face-to-face advice, even if it cost more. The rest remained undecided.
Holly Mackay, founder and chief executive officer of Boring Money, said this shift could carry a ‘sting in the tail’ with some gravitating toward digital advice services that blend automated processes and advice via video forms.
She said: “Traditional advice has weathered the storm relatively favourably over the last 12 months. For an industry dependent on client relationships and face to face contact, advice has fared remarkably well in spite of social distancing and remote meetings.
“But there could be a sting in the tail. We can see a growing acceptance of remote advice delivered digitally, and continued pressure on charges, with a strong interest in fixed-fee models. These factors combine to put pressure on traditional advice from several angles.
“Younger savers and investors are most likely to feel comfortable with remote advice, and with recommendations coming via a computer. As the demographic picture shifts it will drive growth for digital advice models.”
A shift could have the added bonus of turning more people to advice as many interested in a more digital model were currently non-advised.
Nevertheless the report found that of the estimated 3.6m advised investors in the UK today, approximately a quarter were receptive to the idea of getting advice digitally.
Mackay said while there remained a sufficient demand for services that advisers deliver, there was a clear need for models to change.
She said: “Advisers may not have changed but the world around them has. As more options come online which offer convenience, greater accessibility and lower price points- advice firms are not immune to these winds of change and so they need to reassess their models in light of it.”
Move to fixed fees
The report also detected a move away from ongoing advice with more people looking for one-off fixed fees models instead.
Almost half (43 per cent) of respondents said they favoured paying a fixed-fee for one-off financial advice compared to 17 per cent who said they would prefer ongoing advice, charged as a percentage of their assets.
Mackay said this reflected how more people want greater flexibility and do not want to receive, or pay for, advice throughout their lives but as and when they need it.