Gillian Guy: Advice gap solutions may lie outside the private sector

GillianGuy-50 (to be used with picture credit - Copyright Ian Enness)

As it considers submissions to the Financial Advice Market Review the Government won’t be short of evidence and expertise on whether the advice gap exists, and if so what it looks like and how best to tackle it.

Money Marketing’s lead article last week reflects the crucial insight and diversity of views across the industry about the presence (or not) of an advice gap.

For Citizens Advice, the Financial Advice Market Review is a real opportunity for the Government to make sure people are getting the right support to plan and manage their finances.

While the cost and availability of independent financial advice must be central to the debate, it is also important to consider how other forms of money advice can better meet people’s financial management needs.

Citizens Advice this week published its final advice gaps report (the last in a series which identifies four advice gaps). It reveals that up to 23 million people aren’t getting preventative advice which could better equip them to adapt to changing financial circumstances and ensure a secure financial future.

As it stands, people are nearly 50 per cent more likely to get help for a debt problem than with general money management. But at the same time, consumers say they would appreciate help around financial planning or money management if it were offered at key times in their lives, like when starting a family, entering the world of work or moving into self-employment.

This kind of timely money advice would not only help people get to grips with changing financial circumstances and considerations for the future, like childcare costs and life insurance when starting a family for example, but could also reduce the risk of running into financial difficulties later on and recognise how regulated advice can help at different stages of their lives.

The latter is nothing new to Citizens Advice. For over seven years we’ve been running a project with the Personal Finance Society matching people who have had money or debt help from local Citizens Advice with independent financial advisers in their area for free, introductory advice on savings, mortgages and insurance.

This link between two types of advice has helped people build their financial management skills and understanding of how different products and services can provide protection and security for the future.

Our evidence on the advice gaps has found that while the price of advice can be a barrier, people also face challenges including a lack of awareness of what help is available and where to get it.

This means there is a real opportunity for free-to-access and paid-for advice providers to acknowledge the different needs people have and work together to make sure services are built with these at their very core.

As the Government considers its next steps following FAMR, it must understand people’s different money advice needs and recognise that not all of the answers lie in the private sector.

Gillian Guy is chief executive of Citizens Advice