A new report from Age UK and the Chartered Insurance Institute has called for advisers to consider using “focused advice” to address the mass market advice gap.
Citing a recent study by the Personal Finance Society, the report says 35 per cent of people would be more likely to use a financial adviser as a result of the retail distribution review, while 66 per cent of the population do not access any regulated financial advice.
To help address this gap, the CII says advisers should consider offering “focused advice” on specific topic areas like retirement and decumulation for a fixed fee or charged at an hourly rate. This involves a basic fact find and the production of an guide to a client’s options, but not advice on what the client should do.
Chartered Insurance Institute chief executive Dr Alexander Scott says Chancellor George Osborne’s “guidance guarantee”, currently being put together by the Treasury and the FCA, must provide the “right balance of information and direction” so people can make sense of their options.
He adds: “Equally as important is whether regulated advice itself can be made simpler, by introducing focused advice solutions that give people more certainty on specific issues and costs involved.
“The stereotype of older people as savers and careful money managers has an element of truth but knowledge gaps may prevent them from making the best choices.”
The PFS report, published in February, surveyed 2,000 consumers. Of the 66 per cent of people who did not access financial advice in 2013, 38 per cent said they did not have the money to invest while 16 per cent said they could not afford a financial adviser.
Almost a quarter said they would rather make financial decisions themselves based on information from websites and newspapers.
Among those over 80, around one third of people would turn to friends and family for advice first while just 6 per cent use a financial adviser.
The Government has committed to providing “free, impartial face-to-face” guidance for everyone from April 2015. The report says a “portable fact find” containing details of an individuals savings, assets, pension pots and debts should be introduced as part of this reform.
It says: “With permission from the consumer this portable fact find could be shared with anyone giving the financial advice or guidance at any stage in their lives and could be updated as and when circumstance change.”