Seven digital advice firms have come together and launched a campaign to tackle the growing advice gap.
The group, titled Digital Advice Group (DAG), will be chaired by Boring Money chief executive officer Holly Mackay and promote the benefits of financial advice and alternatives to traditional, face-to-face models.
Founding members are Abrdn, Barclays, Hub, OpenMoney, Netwealth, Vanguard and Wealth Wizards.
The group believes by raising awareness of digital advice and the range of services it makes available, it can help to close the advice gap and support more individuals and their families to benefit from regulated financial advice.
The DAG will operate as a regular forum and build initiatives to promote awareness of digital advice.
The launch comes as various surveys by Boring Money found appetite for financial advice was high but the advice gap persists.
Consumer confidence around pensions and investments remains very low, with half (49 per cent) of all investors and 70 per cent of cash savers giving themselves a low confidence score of 5 or less out of 10 when asked how they’d feel opening a new investment product.
Some 18 per cent of workplace pension holders told Boring Money they did not even know the money in their pension is invested.
The firm also found 59 per cent of non-advised investors would consider taking financial advice in the future, despite the majority of investing today done on a DIY basis, with just 23 per cent of investors currently using a financial adviser.
Boring Money said lack of awareness and concerns about fees remained common barriers.
Around 30 per cent of non-advice users cited not being able to afford a financial adviser as a key barrier, while a further 9 per cent did not know where to find one.
Boring Money’s segmentation indicated digital advice could play a critical role in closing the advice gap.
It showed as many as 12.7m UK adults fall into the advice gap and half (6.3m) expressed a preference for digital advice.
Reasons for the preference included lower perceived costs and greater convenience and flexibility.
Boring Money said this meant there was an estimated addressable market for digital advice of £355bn.
Mackay said: “We set up Boring Money to help consumers to make better choices. But sometimes people’s questions are not about products, but advice.
“Most consumers are unaware that their advice options have expanded, opening up financial advice to younger people, to people who want to pay less, or to people who want a more convenient, digital solution which can be done largely from the comfort of their own home.”
She added: “Awareness remains very low – it’s our mission to spread the word and to support confident choices.”
OpenMoney partnership
Meanwhile, as well as being a founding member of DAG, OpenMoney has partnered with The Co-op Credit Union to provide services to their membership.
The partnership will see members able to use the OpenMoney app with a range of budgeting and tools along with access to investment and mortgage advice.
OpenMoney’s 2020 Advice Gap research found 20.8m UK adults who would potentially benefit from advice were unaware of free advice services or unable to access them.
The firm said as part of its mission to close the advice gap, it wants to raise awareness of free and affordable financial advice to members of the CCU.
Anthony Morrow, co-founder of OpenMoney, said: “Credit unions play a vital part in financial services, giving their members an attractive and convenient way to save and a cheaper way to borrow if needed.
“Due to the structure of credit unions they often struggle to compete in terms of technology and marketing with their heavily-funded, more expensive, competitors. Our partnership will allow them to bring our technology to their members and their services to more people.”
Matt Bland, CEO of The Co-op Credit Union, added: “We have a long history of providing a range of affordable financial services to our members and our partnership with OpenMoney paves the way for us to go beyond our core savings and loans services to support even more people with their finances."
sonia.rach@ft.com
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