Welcome. Mike here, holding things together while the Boss does whatever he does on his time off. I trust you are all well.
Big week this week. Not only is there something happening tomorrow, but far more importantly (at least in our world) we launched the 2024 edition of our Advice Gap research earlier this morning. This is the 6th time this particular study has been published, stretching all the way back to 2015 when Citizen’s Advice kicked things off. We’ve been involved ever since, bringing in not only consumer research from YouGov, but also adviser views via our very lovely adviser research panel.
So, what have we found this time? Starting with the main headline, the advice gap is widening. Only 9% of our consumer respondents (a representative sample of the UK population) have paid for advice in the last two years. This has fallen from 11% in our 2023 study.
It is probably too early to attribute all the blame for this fall to Consumer Duty (the regulation, not the band) however our adviser research shows that it has indeed been a major contributory factor. Over half (55%) of advisers have stopped serving clients as a direct result of Consumer Duty. Four-fifths of advisers say it is making it harder to service lower value clients. If the advice gap is to be reduced, something needs to change.
Fortunately, change is indeed coming, in the form of the FCA’s Advice/Guidance Boundary review. We’ve tested consumer responses to these proposed changes (spoiler: they are confused) as well as adviser appetite. The good news is that the advice profession appears to be very supportive of these changes, even if or when the scope is expanded to include at retirement advice. There is still a lingering fear that “providers are going to steal my clients”, but with increasing clear blue water between an adviser’s core clients versus the clients for whom these services are targeted at, the majority of advisers would actually see it as a net positive if providers moved into this space.
Finally, to end on a positive, last year our research showed trust (i.e. lack of) was the biggest barrier for those who had considered paying for advice but ultimately chose not to. This time round, trust has fallen to third place, behind “it’s too expensive” and “I can look after my own money”, the latter being heavily skewed towards males. One of Consumer Duty’s primary objectives was to create higher standards for all firms, leading to improved competition and customer outcomes. Again, early days, but whilst Consumer Duty does appear to be making the advice gap wider, consumer trust is improving. Out of those who have paid for financial advice, 91% say they found it helpful, the highest level we’ve ever had. The topic of ongoing advice fees is still going strong, but this level of customer satisfaction is a strong endorsement of the value advisers add to their clients’ lives.
Only one choice for the musical link this week….
Vote wisely. See you next time.
