'The Financial Advice Gap' Report Review
Last week saw the launch of the LangCat Advice Gap Report. https://langcatfinancial.co.uk/publications/advice-gap-report-2/
This research was conducted by YouGov Plc on 13 and 14 February 2023. The total sample size was 2,035 British adults and the survey was carried out online.
In the last two years, 11% of those surveyed have paid for advice, with 60% of those that took advice receiving ongoing advice.
Advice and or advisers still have a bad reputation and issues around trust with some.
“3.12 million people would pay for advice if trust could be improved”
In part this can be down to the collective industry working harder to ensure that the whole advice journey is slicker.
As rightly pointed out by the team at LangCat, an adviser can do a fantastic job onboarding new clients, understanding their needs and setting the train in motion, but if Letters Of Acceptance (LOAs), valuations and scheme information then takes weeks to arrive it's often the adviser that bears the brunt. On that point of poor admin being called out, it was no surprise that this month we saw Origo release stats around pension transfers and highlighting that they have increased from an average of 10.7 days in 2020 to 14 days in 2022. Something the industry needs to sort out before pension dashboards can be introduced.
For the industry to grow the sector there are a few behaviours to reflect on. Supply side, making sure that’s done right, helps make clients love the service and champion it.
“32% of new leads still come from referrals”
But at a public level what can the industry do to make that happen? Working together to share more good news stories about the value of advice, how the sector is working to address diversity and build tools and services that support the wider market.
“We believe that a collective voice is needed to address the issues surrounding the Advice Gap, and larger brands, which can reach a broader audience, have an important role to play” LangCat
Of those that took advice, 88% believe it represents good value for money, with 87% rated experience of advice as helpful.
The key in the coming years to solving the advice gap will not only be improving trust, but providing tools and services that better onboard new clients and support those that historically felt that they could not afford to take advice.
“38% of firms claim they have a specific proposition for low value clients”
With better access to data in real time and the adoption of digital tools, across all age groups, we should start to see the accessibility and cost of advice fall.
The report also highlighted an interesting trend; the average age of people seeking traditional advice is 59. That's quite concerning because waiting until that age to realise you haven't saved enough for retirement is a bit too late. Aviva, one of the participants at the event, stressed the importance of engaging people in the 35-45 age bracket to develop good financial habits and build trust. It was surprising to learn that many younger folks, despite being digital natives, still don't trust technology when it comes to financial services.
So how do we crowbar AI into this blog?
Well, this week I came across https://www.parthean.com/ “the world’s most affordable, powerful, & reliable financial coach — in your pocket.” The tool claims to have “integrated the most cutting-edge AI tools with your personal financial information. This allows you to ask any question about your money and get answers that are personalised and immediate.” How personalised and how immediate the responses still needs to be seen as does where the line will sit between advice and guidance as tools like this become more sophisticated and can link into your real time data to make recommendations. Perhaps a supporting tool for advisers going forward to enhance the advice journey?
By embracing technology, providing education, and fostering confidence in financial matters, LangCat believes the Advice sector has the potential to double and make an even bigger impact on individuals.