A survey of over 2,000 people by financial and technology services firm True Potential has revealed that nearly 70% of savers who seek financial advice now use a financial adviser to do so.
Following the introduction of the Retail Distribution Review and prior to the introduction of the new pension freedoms on April 6th, just 42% would have gone to a financial adviser if they were looking for advice.
More than a third (36%) of respondents say they would turn to their bank or building society for financial advice, yet True Potential says this is not always a viable option given that the number of bank advisers authorised to offer investment advice has fallen by a fifth since 2010.
Just 8% rely on the Money Advice Service, which was set up by the government in 2011 and is funded by a statutory levy on the financial services industry.
However, despite the surge in demand for their services, many advisers remain unwilling or unable to advise, wary of future mis-selling claims.
Over 60% of advisers did not think that the new pension rules are working as they were intended to, while nearly half reported that fewer than 10% of those enquiring about pension freedoms have successfully accessed their money since the new rules came into effect.
David Harrison, managing partner at True Potential, said:
“The financial advice industry has been overhauled in recent years, leading some clients to believe that they could no longer afford advice. Meanwhile many advisers have opted to focus on clients with larger portfolios at the same time as the number of bank advisers has fallen. The result is the advice gap.
“The introduction of the new pension freedoms has energised consumers and we are seeing high demand for advice. However, instead of a great liberation of pension funds across the country, the new reforms have left savers frustrated by industry bottlenecks, inertia and an industry refusal to play by the new rules.
“Savers are told they must seek professional advice before switching to a new provider. But many financial advisers are still wary of the new risks and future liabilities they could face in recommending a switch.
“The Financial Advice Market Review is a welcome step and I hope the outcome is more accessible advice that leverages technology and provides clearer guidance for advisers.”
