The advice gap is a well-documented phenomenon.
Less than one in 10 adults (8 per cent) took regulated financial advice in the preceding 12 months, according to the Financial Conduct Authority's Financial Lives 2020 survey.
But it is not just advice that consumers are missing out on. More than two-thirds (68 per cent) of adults did not receive support in the same timeframe, despite the broad definition that includes information and guidance, as well as regulated financial advice.
Is the onus on advisers to address these deficiencies?
In its new report, The Investing and Saving Alliance says it is “simply not realistic” to expect the financial advice community alone to fulfil the support needs of consumers or plug the advice gap.
Consumer support also needs to come from product providers, banks and building societies, which often have existing consumer relationships across the country, Tisa adds. Savings and investments support also needs to be delivered in an “engaging and more personalised manner”.
Research commissioned by Tisa found 73 per cent would be interested in a personalisation service where their provider gives them access to a tool that makes it quick and easy for them to input data to identify and select savings products that are relevant to them. Almost two-thirds (63 per cent) said they would be interested in the same personalisation service for investment products.
But Tisa says there is a “large gap” between the personalised support that consumers would like, and the type of support that the industry can provide.
“Advice regulations prevent firms from providing personalised support by defining such activities as advice as opposed to guidance,” says Prakash Chandramohan, strategic policy director at Tisa.
“By its very nature, personalised support requires product providers, banks and building societies to take consideration of the circumstances of a person. But if they do so, they risk the support service triggering and meeting the definition of a personal recommendation.”
Consumers are instead turning to sources such as their bank’s website, comparison sites, online tools and calculators.
Tisa’s findings reveal consumers are equally likely to research investments by reviewing social media websites as they are to getting support from a financial services provider/bank.
The body warns that many customers are using less formal and often unregulated sources for support in making financial decisions, increasing the risk of them being subject to misinformation and scams.
Indeed, separate research from Skipton Building Society found more than a third (35 per cent) of adults trust financial advice they see on the social media platforms TikTok, Instagram and Facebook.
In a behavioural science experiment, several fictional social media personalities were created to gauge how likely respondents would be to follow that personality’s advice.