More than half (55 per cent) of UK adults with any financial products think that “paying for financial advice is for the wealthy”, according to new research by the Financial Services Compensation Scheme.
The research, which surveyed 2,000 UK adults aged between 18-75, found that almost two-thirds (64 per cent) of adults with savings, investments or a mortgage have not sought regulated financial advice in the last five years.
More than one in five of those who obtained free guidance rather than regulated advice said they did so because they believed the service was “too expensive”.
The survey found that young people between the ages of 18 and 34 were most likely to agree that it should be easy to invest without needing professional financial advice.
More than half of UK millennials (60 per cent) and Gen Z (57 per cent) with financial products agree they can find good financial advice online, and almost half (44 per cent) of Gen Z believe they can source good financial advice on social media.
Caroline Rainbird, chief executive of FSCS, said: “The financial ‘advice gap’ is a concern for FSCS, particularly as scammers will prey on peoples’ fears and exploit any gaps in their financial knowledge, putting them at greater risk of making poor decisions about their money.
“Our latest research shows that consumers are looking for easy ways to invest, whilst also getting the right support. The FCA’s Consumer Investments Strategy looks to make advice on mainstream investments more accessible and affordable to everyone, which is something we welcome.”
Of the 2,000 UK adults aged 18-75:
- 1,901 have financial products.
- 1,660 adults currently have savings or investments or a mortgage.
- 678 adults currently have savings or investments or a mortgage and have taken financial advice.
- 203 adults currently have savings or investments or a mortgage, have taken financial advice and have used paid for regulated advice.
- 128 adults currently have savings or investments or a mortgage, have taken financial advice but did not use a regulated FA.
With investments, pensions and cryptocurrency scams on the rise, as fraudsters seek to take advantage of the cost-of-living crisis, FSCS said its research suggests there is a greater need for consumers to understand the difference between regulated advice and guidance, and what to expect from each.
Not seeking regulated advice, or following guidance from unregulated and unsuitable sources, could put UK adults at higher risk of putting their money somewhere that is not safe.
Rainbird added: “At FSCS we see the impact of poor advice every day. It results in millions of pounds each year disappearing from consumers’ pockets.
“We can only offer protection on financial products and services that are regulated, and we encourage consumers to check if they are likely to have access to FSCS protection if something goes wrong.”
However, the findings also revealed that among those UK adults that have taken paid for regulated financial advice, 62 per cent said that if they needed financial advice for a similar reason, they would use the same service from the provider they used before.
Across the various regions in the UK, adults with savings, investments or a mortgage living in Greater London had been the most likely to seek financial advice in the last five years – with 49 per cent of them saying they did so.
This was followed by South England (38 per cent), Scotland (36 per cent), North England (34 per cent), and Wales (33 per cent).
Adults living in the Midlands were the least likely to seek financial advice (31 per cent).
When asked if there were any circumstances in which they would pay for regulated advice the most common answer was after receiving a lump sum of money such as inheritance, bonus or insurance pay out.
sonia.rach@ft.com
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