Fifth of UK adults would not seek advice even if it was free

In a report, titled ‘State of Flux', the firms found that over a fifth (23 per cent) of people said they will not be swayed to get financial advice no matter the circumstances, and even assuming the advice was free.

The research considers the factors that shape the current financial advice market, and the potential challenges and opportunities that may be posed for the future industry.

The online survey, which surveyed 2,000 adults in August 2023, revealed that over one in five (21 per cent) who are not engaged with advice said they believe they do not have enough wealth to warrant seeing an adviser. 

Two additional indicative reasons to do with perception of advice are ‘not trusting financial advisers’ (11 per cent) and ‘being afraid of pushy sales techniques’ (9 per cent).

Meanwhile, the report proposes that the advice gap could widen before there is any chance of it closing. 

Tom Evans, managing director, retirement, at Canada Life, said: “Closing the advice gap is clearly not a straightforward issue. 

“In fact, we should be honest with ourselves and recognise there will always be an advice gap borne from people’s lack of willingness to engage, and advisers’ capacity to service.  

“But that shouldn’t mean as an industry we don’t try to do a better job of communicating and marketing both the benefits and value of financial advice.”

Evans said clearly trust, or a lack of it, is still a factor that continues to plague the advice market. 

“The fact that one in five people would not see an adviser even if it was free, is quite shocking,” he added.

“Why would a customer seek mortgage advice but be confident enough to choose the right path to retirement without advice? 

“We need to be bold and challenge the current status quo, while also recognising that to serve a wider customer group, we need to embrace technology alongside attracting more advisers into the profession.”

However, those that see an adviser on an ongoing basis attach a great deal of value to their relationship. 

Top value factors include access to someone human who understands the financial situation (19 per cent), peace of mind over financial decisions (19 per cent) and the knowledge that advisers are regulated (18 per cent).

Additionally, some consumers (12 per cent) said they regret not seeing a financial adviser in the past. 

The top three biggest regrets were: worrying they now do not have enough money to fund retirement (35 per cent), underestimating the impact of inflation (31 per cent) and losing money (27 per cent). 

Canada Life said the report indicates those who have not engaged with financial advice have unwavering and often jaded views of what the industry stands for or could offer them on a personal level. 

The research also surveyed 100 advisers in the same period which involved facilitation of a series of online/telephone interviews.

One adviser summarised in the report that, “Advice needs a stronger brand than it currently has". 

Explaining the benefits of advice to new clientele has obvious value. Yet the report findings also show  there is a demand for more communication from advisers with their existing client base. 

Those who have spoken to an adviser in the past five years were asked in what ways they think their adviser relationship will need to adapt or change in the future. 

The top reason selected from the options provided was “increased communication and updates", involving more regular check-ins, performance reviews and adjustments as circumstances change (23 per cent).

Insights from speaking to advisers revealed that investing in marketing and communications may not be an economically viable option, for at least some businesses. 

In fact, ‘marketing costs and issues attracting new clients,’ was the top cause for concern relating to ongoing operations (40 per cent).

Evans added: “The hope is that research such as ‘State of Flux’ will encourage the industry to have open discussions around challenges such as these, and ultimately keep driving the conversation forward.”

sonia.rach@ft.com

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