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Tim Sargisson: Why won’t consumers get the message?

The benefits of advice are clear, yet the industry still struggles to get consumers through the door

As someone who is now accustomed to being variously described as “seasoned”, “experienced” and, in one case, a “veteran” of the industry, it is safe to assume I know something about the world advisers inhabit.

Indeed, 30 years have passed since I began my career as a graduate trainee at a long defunct mutual insurance provider. During this time, two things have remained constant: regulation and a need to engage with consumers in a meaningful way.

There is no doubt regulation has hugely improved the levels of protection afforded the consumer. So is it reasonable to assume we should expect to see greater numbers of consumers seeking advice, knowing they are protected if things go wrong?

Unfortunately, there is little to show in terms of a correlation, and one of the areas I want to explore here is how, as an industry, we can better engage with consumers.

Malcolm Kerr: Hybrid model is future for advice firms

The FCA aims to promote effective competition in the interests of consumers on the basis they are empowered, as well as informed when competition works well. As advisers, we must look at what we can do to better support engagement.

Let us start with some good news: the latest Platforum Consumer Insights report confirms that the tendency for consumers to be entirely self‐directed decreased in 2017. This contrasts with a substantial increase that Platforum saw a year ago. Similarly, the proportion of entirely advised investors fell off considerably a year ago but the latest figure is back in line with previous years.

Nevertheless, the report highlighted that one third of British investors deal with their investments themselves with no help or advice from experts, whereas less than one fifth leave it all to an expert and have as little to do with it as possible.

It did also find that the future intentions of cash savers who are thinking about investing suggests there is a healthy pipeline of potential new clients that may need advice. However, every silver lining has a cloud, and this one’s can be seen in the finding that half of these investors are likely to go to a high street bank, compared to one fifth who would go to an adviser.

Three advisers going the extra mile for clients

It is disappointing that more people do not go to an adviser, since advice has clear benefits.

Indeed, research published by the International Longevity Centre and Royal London last year found that those who received financial advice between 2001 and 2007 compared to those who did not were, on average, £40,000 better off by 2012 to 2014, and had accumulated significantly more liquid financial assets and pension wealth.

In the words of the report’s author, Ben Franklin: “The clear challenge facing the industry, regulator and government is therefore to get more people through the ‘front door’ in the first place.”

Yes, it is disappointing indeed. I would be interested to hear your views as to the tangible steps we can take to improve matters.

Tim Sargisson is chief executive officer at Sandringham


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There are 9 comments at the moment, we would love to hear your opinion too.

  1. Christopher Pitt 7th February 2018 at 3:18 pm

    Two thirds of households have less than £1500, and half of those have nothing at all. With most advisers not taking on clients with <£50k to invest and charging a couple of grand for their advice is it any wonder that most consumers don't take advice? The real challenge is to get more consumers saving in the first place.

    • agreed, and the average rate of savings in the uk is 1.7% of income, about the lowest anywhere (Germans 165, Chinese 35%), Economic insecurity has become the “new normal” in the UK with at least 70% of the UK’s working population “chronically broke”, according to a study by the thinktank the Royal Society of Arts. Then add a generation owing £100bn in student loans, and paying an average 40% of gross income in rent. Not much left for saving.

  2. The main reason in my opinion is they never read anything positive about financial advice. The only news they ever see is bad.

    When was the last time you saw any good news, media outcome?

    This is why the consumers don’t take advice, they believe what they read, get told by the media.

    Most do not even understand the FCA, FOS or FSCS and execution only rules.

  3. Two days ago a very fine lady came to my office and asked to discuss her existing pension arrangements with an IFA, when I asked her how she came to be in my office she explained, Having found an IFA via Unbiased she had an appointment with him, however felt very uncomfortable sitting in his Lounge Dinner discussing as a single lady her financial matters with a total stranger, having left his 1st Floor flat walked down the road and walked pass my High street Office, blazoned with the IFA Logo outside. She said I feel comfortable with knowing your looking professional and seem to have been here for some time, Yes in the same office for twenty two years and using the same telephone number for a thirty years. The Point is, until we stop the bed side manor of being little one man bands and portray a Professional and business like appearances to the Public, they , the Public will remain of the thought, we are the seconded oldest industry in the world and the other one is highlighted on the street maps of old pompai.

  4. Spot on Martin.

    Why don’t advisers try taking on say one Client per month with investible assets less than £100,000 or £50,000 and give them appropriate advice.

    The PFS, Govt. and the FCA could do more to promote the really good advantages of Financial and Retirement Planning

  5. Speak for yourself Tim – we have no shortage of clients that fit our target profile wanting advice!

  6. I believe there are two main reasons:

    1. People (in the main) are just not interested. They firmly believe they live in a welfare state that will look after them and in fact if you are impecunious that is not far from the truth.
    2. Unpalatable as it may be you just have to accept that on average the Great British Public are thick. (Just drive around for half an hour)

    In fact there are plenty of people that fall into neither category and these are the ones that the IFA community should be concentrating upon.

    A 2016 survey by global currency business Centtrip has claimed that an astonishing 1.2 million people in the UK are earning over £100K a year. There are about 22k advisers in the UK – so that equates to about 54 clients in this category for each adviser. The additional clients can be made up of people earning between £70k and £100k.

  7. I’m finding this page very informative on how it is that the proportion of people taking out protection on an unadvised basis has shown such a marked rise since RDR and why the protection market stalled until mortgage brokers got more active there.

  8. Isn’t the problem in the disjointed nature of the question?

    Advice is a Good Thing, but isn’t just delivered by the nebulous group of “advisers” referred to.

    How many of the 50% who go to a high street bank get advice? Those banks are themselves (or at the very least could be) advisers, and most people’s straightforward needs can be perfectly adequately met there.

    What about the unaccounted-for 30%? SOme will be unadvised for sure, but I’m guessing there’s also a fair body of accountant- and solicitor-advised clients in that segment too. But again I assume that a DPB licence doesn’t get you into the hallowed minority status of “adviser”.

    So, “the tangible steps we can take to improve matters” start with better articulating the issue and re-running the numbers to get a clearer idea of how big the problem is.

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