Insights from the Advice Map of Britain

Yet it is also well documented that a growing number of people across the UK find themselves in an “advice gap”, missing out on the significant benefits that expert financial guidance can offer.

It begs the question: how can advisers broaden access to advice and help more people enjoy its benefits, while at the same time making the most of the business opportunity to secure a successful, profitable future for their firm?

The Advice Map of Britain: a valuable insight

To gain a deeper understanding of the individuals who fall within the advice gap, and to identify the steps needed to close it, we have created an “Advice Map of Britain”.

As a dominant player in adviser practice management systems, with a market share of 52 per cent according to NextWealth, we were able to review data from 3mn advised clients to uncover who is taking advice – and more importantly, who is not.

Our analysis revealed persistent disparities in access to financial advice. Key factors impacting an individual's likelihood to seek advice include gender, age, relationship status and geographic location.

Gender inequality

Simply being a man makes it more likely that you will seek financial advice.

According to our data, half of advised clients are male and two-fifths (43 per cent) female – the gender of the remaining 7 per cent is not specified. Northern Ireland has the widest gender advice gap, with 43 per cent female clients versus 54 per cent male, while London boasts the narrowest gap at 47 per cent female and 50 per cent male. 

Finding ways to engage more women, younger generations and single people with their long-term finances and reduce geographical disparities is crucial to widening access to advice.

The gender pay gap, resulting in women having less spare money to put away for their future, is likely to be a factor in fewer people taking advice. However, risk aversion could also play a part. HM Revenue & Customs Isa subscription figures show that women who do have money are more likely to save than invest.

In 2019-20 81 per cent of women chose a cash Isa, 15 per cent a stocks and shares Isa and 4 per cent both, compared with 71 per cent, 22 per cent and 6 per cent of men respectively. 

By investing less, many women have less opportunity to grow their money, compounding wealth inequalities. Bringing more women into advice is crucial to their long-term financial security. 

Generational disparity

Alongside the gender imbalance, our Advice Map also uncovers a significant age bias, with two-thirds (68 per cent) of advised clients over the age of 50, and 14 per cent in their 40s, while just 4 per cent are under 30.

There is evidence that this demographic is more disengaged with their finances. Royal London’s advice gap research found that 44 per cent of 18 to 34-year-olds have little awareness of their own financial situation, and seeking advice is not something they have thought about.

However, with life expectancy increasing steadily and the shift from defined benefit pensions to defined contribution, as well as lower homeownership among younger generations, developing a proper financial plan early in life has never been more important. 

We need to engage younger people with advice as the clients of the future, for their own benefit and to safeguard the long-term health of the sector.

Relationship differences

Surprisingly, our analysis suggests relationship status could be the biggest indicator of your likelihood to get advice.

Nearly half (44 per cent) of advised clients in our dataset are married or in a civil partnership, compared with just 11 per cent who are single, 6 per cent widowed and 1 per cent divorced. 

There could be several factors at play here. Older people are more likely to be married. According to the Office for National Statistics, five times (19 per cent) as many people aged 70 years and over are married compared with those under 30 years (3.7 per cent) – and, as mentioned earlier, older people are also more likely to take advice.

In addition, a marriage commitment often coincides with other life events, such as having children and buying a house, which can prompt people to take advice. 

The ONS data shows that marriage rates are falling and cohabiting increasing, so it will be interesting to see whether our data on the relationship status of those taking advice will change over time.

Geographic variations

Our data also highlights that where you live plays a role in whether you take advice. Scotland and the south west of England have the greatest proportion of the local population receiving advice, each at 7 per cent, while London and north east England have the least, at 4 per cent. 

There is a perception that people do not take advice because they do not have enough money. While this is likely true to an extent, our geographic data suggests it is not quite that straightforward. 

The north east is the second poorest region in the UK (after Northern Ireland), with a gross disposable household income (GDHI) per head of £17,663 according to the ONS. This may account for fewer people there taking professional advice. However, London is the richest region with £31,094 GDHI per head, and the take-up of advice there is also very low.

Possibly the capital’s position as a centre for financial services means more wealthy people in London choose to manage their own finances.

Or it might be the fact that London’s population has a median age of 35.9, compared with 44.1 for those in the south west of England, according to ONS figures – and as we have seen, younger people are less likely to take advice.

It is easy to speculate, but it seems taking advice is not just about having the most disposable income. 

Widening access to advice

The Advice Map of Britain shows that married men over 50 are prevalent among advised clients, accounting for one in five individuals receiving financial advice in the UK.

Finding ways to engage more women, younger generations and single people with their long-term finances and reduce geographical disparities is crucial to widening access to advice. 

As well as the positive impact on society and people’s futures, there are major business benefits to addressing the advice gap.

According to Royal London advice gap research, around 39mn adults in the UK fall into the advice gap, but of those, 3.7mn people are open to receiving professional financial advice and have investible assets worth more than £50,000, creating a £185bn opportunity for advisers.

Firms wanting to grow their business and extend their reach beyond the current traditional advised client base need to consider how best to set themselves up for success.

Embedding technology within the advice journey is key to opening up advice to new audiences and delivering significant benefits to clients, while at the same time ensuring the continued profitability of the firm. 

By streamlining adviser processes, technology can improve efficiency and overall business performance and reduce the cost of servicing clients.

Our 2022 e-Advice Index, which analysed a firm’s business metrics alongside its use of intelliflo office, revealed that advisers who use all parts of the system generated per adviser 54 per cent more revenue and 76 per cent more ongoing revenue than firms using just the core functionality. 

Technology can also improve a firm’s capacity to manage new clients, with the eAdviser Index showing that high-tech adopters can service 39 per cent more clients than their low-tech counterparts.

With the low growth in adviser numbers we have seen in recent years, helping firms manage more clients without increasing headcount will be central to broadening access to financial advice.

In addition, technology is vital in supporting advisers in widening the reach of their firm into new geographical locations as well as servicing clients who prefer to access information outside of normal working hours.

By using client portals and virtual meetings, advisers can meet the needs of today’s hectic lifestyles, or expand beyond their traditional radius for in-person meetings to offer advice regardless of the client’s location. 

With persistent inflation, high interest rates, economic uncertainty and volatile markets, many people now face serious financial challenges, making financial planning more important than ever.

Advisers remain crucial to delivering quality financial planning, but technology holds the key to bridging the advice gap and supporting firms’ long-term success. 

Nick Eatock is the chief executive of intelliflo