The financial advice industry needs to rethink its fee charging model as Brits fail to see the benefit off traditional long-term relationships with advisers.
The Association of British Insurers (ABI) surveyed more than 2,300 UK adults and found 72% would not pay for advice.
Meanwhile, 46% wanted the option of one-off financial advice instead of the traditional model of ongoing fees 12%.
‘Not suitable for everyone’
Gemma Harle, manging director of Quilter Financial Planning said: “The figures from the ABI reveal the critical challenge faced by the financial advice profession.
“With 72% of people unwilling to pay for advice there is a clear need to change the perception and understanding of advice and financial planning and the value it offers.
“At the same time, advice needs to evolve to be given via different channels, such as telephone-only or online that can be delivered as a simplified service in a cost-effective manner to a wider public.
“However, more than that we need to think about the wider remit of financial advice and tools available to help combat the vast advice gap
“We know that traditional financial advice is not suitable for every single person, but we also know that almost everyone would benefit from some help, guidance or simplified financial advice at some point in their life and in particular at the point they start thinking about withdrawing from their accumulated pension funds.”
Regulator intervention
The Quilter Financial Planning managing director also spoke how the Financial Conduct Authority (FCA) can help change this mindset about financial advice.
Harle added: “Currently, pension scheme members receive a single-page document that points to pension guidance within two months of their 50th birthday, and from 55, members will receive a ‘wake-up pack’ which will again point them towards guidance.
“The FCA’s investment pathways initiative, due to be implemented next year, will also present non-advised customers with four drawdown options, and another nudge towards guidance. But despite all these measures, there will still be many that do not take guidance and miss out on the support on offer.
“Encouragingly, the FCA has started to look again at guidance and simplified financial advice as part of its call for input on the Consumer Investment Market.
“This momentum must not be lost as it is critical for the financial wellbeing of the nation that the regulator, government and industry work together to ensure we can deliver the financial support people need.
“There have been a number of false starts with financial guidance but hopefully lessons have been learned.
“People are obviously trying to make good decisions but many are missing out on critical support unless we can create clear boundaries to allow for the provision of guidance, which experience of Pension Wise shows us is likely to augment advice and not threaten it.”
