"How can our sector increase access to financial advice, particularly households coping with financial distress?"
73% of financial advisers believe the gap between those who get financial advice and who want it expanded over the last five years, with more than half describing it as “a lot wider”.
The research from intelliflo found that more than six in ten advisers (62%) believe the advice gap grew even more during the pandemic.
With the cost-of-living crisis, rising interest rates and now the Chancellor’s confirmation of an economic recession in the UK, more than half (58%) of the advisers in the poll have seen an increase in people seeking advice in the last 12 months. The profile of those reaching out to the advice profession doesn’t seem to have changed, as most advisers (84%) haven’t noticed a shift in the ethnic background, income level (80%), or the number of women (89%) onboarded as clients.
From the adviser perspective, intelliflo’s poll found that firms feel they are prevented from reaching out to more people that don’t typically access advice because the cost of servicing these clients is too high (46%), lack of time to service more clients (34%) and the added compliance burden (32%). Though many firms are taking a number of positive steps to help those who are less likely to take advice. Over the last 12 months, more than two-fifths (43%) have hired junior advisers to take on some lower income clients, and the same number (43%) have taken on lower income clients as wealth in waiting.
The potential for technology to help reduce the advice gap is recognised by the advisers surveyed. Asked for the top three things that would help the industry reach more people that don’t typically access advice, 54% cited more widespread use of technology by advice firms and 41% said more widespread use of technology by clients. Nearly all financial advisers surveyed (95%) believe that technology is crucial to bridging the advice gap and reaching those who don’t typically access advice.
Nick Eatock, CEO of intelliflo, commented: “As evidenced by our recent Advisory Business Impact Poll, many advisers are prevented from helping a wider range of clients due to a lack of time and resources.
"So how can our sector increase access to financial advice, particularly households coping with financial distress? We firmly believe that adopting technology to its best effect will make it possible for the sector to reach thousands more clients and make advice more affordable and accessible. Embedding technology effectively into the advice process helps deliver cost savings through improved efficiency and economies of scale that firms can pass on to clients through lower fees. It can also deliver a business case for widening access to advice by increasing the commercial viability of working with clients with lower investible assets.
“To truly widen access to financial advice, we also believe that it’s extremely important to attract new talent to the industry, which is why we partnered with The Verve Foundation earlier in the year helping to finance the training, exams and upskilling of those looking to start their career in financial services.”
