For those firms which have battled through adapting to the RDR the market must be looking more attractive than it has done for many years. The Chancellor’s proposals to unlock accumulated pension assets at retirement will almost certainly represent an advice opportunity on an unparalleled scale.
The legacy product review should also create further opportunities to assist consumers still accumulating assets. At the same time auto-enrolment is bringing an unprecedented number of investors into the long-term savings market.
In preparing to take advantage of this range of opportunities, advisers should at the same time understand changes that are taking place in the way consumers access information and financial advice. A number of studies have been published in the last couple of weeks which give insight into altering behaviour.
I am increasingly forming a view that advisers need to make decisions around the extent to which they wish to provide advice to different age groups. Research just out by JGFR/GfK identifies the significant impact online and digital services are having to the way consumers access financial information.
The study specifically asks if consumers believe “being able to research and carry out financial product transactions online has reduced their need for financial advice”. The survey gives the current responses and also shows the average over the last six years. Perhaps predictably 60 per cent of 16 to 34-year-olds answer yes to this; this figure represents a significant increase over the six year average response of 38 per cent.
Forty-five per cent of 35- to 54-year-olds agreed online services reduce their need for advice, up from a six-year average of 37 per cent and even in the 55 to 65 group the figure is as high as 40 per cent, up from a six-year figure of 29 per cent.
This latter group will surprise many advisers who would see such an audience as their core target.
It is only in the 65 and above group that the percentage falls to a mere 15 per cent of consumers, barely moving from a six year average of 13 per cent. Notably 43 per cent of adults now say they use mobile devices to access financial information.
A separate study from JGFR and ComPeer has identified a dramatic increase in the number of consumers without any financial adviser, with less than one in four adults (23 per cent) taking financial advice having shrunk from over one third (34 per cent) in 2009. While IFAs still take the largest individual share of the advised market accounting for 11 per cent of adults, this is dwarfed by the 57 per cent who have no financial adviser.
It is always worth looking at lessons we can learn from other industries, so I found insight from a report on the future of online retailing from Vouchercodes.co.uk fascinating.
Comparing attitudes of 18 to 24-year-olds with over-55s, the study found that a higher percentage of the latter group, 43 per cent, stated that nothing held them back from shopping online as opposed to only 32 per cent of the younger group. Also, 60 per cent or the older group said that they compare prices online before visiting a store. Increasingly online is not just about young people.
Any adviser who thinks consumers are not using digital services should have a good look at the devices their clients are carrying.
Digital channels are beginning to look like an essential part of an adviser’s proposition if they are going to target anyone younger than the baby boomers.
There has long been a belief among many in our industry that the advice sector is immune from the sort of changes that have transformed many other industries but I am in no doubt that the optimal scenario for advice delivery is a combination of digital and human services.
These research studies show consumer behaviour is rapidly changing and that incorporating digital services should now be seen as a crucial component of their propositions if firms do not wish to limit their ability to take advantage of the huge boom in the advice market that recent events make inevitable.
Ian McKenna is director of the Finance & Technology Research Centre