A report which puts the value of advice at over £40,000 has kickstarted a debate into whether the workplace holds the key to boosting advice take-up.
A report from think tank ILC-UK and Royal London has calculated advised clients are better off by a total of £41,099 in financial assets and pension wealth compared to those who did not take advice.
The ILC crunched the numbers based on data from the Office for National Statistics’ wealth and assets survey, and looked at the impact of advice between 2001 and 2007 and how this affected outcomes for consumers in 2012 to 2014.
It found that among less wealthy consumers, the benefit of advice came to an average of £14,036 more in liquid assets compared with those who were not advised, with £25,859 more in pension wealth.
Alongside calculating the value of advice, the ILC put forward a number of recommendations to support an increase in demand for advice.
At a roundtable debate at the House of Lords last week, panellists debated one of the proposals: to place a duty on employers to support their auto-enrolled staff in getting advice.
It was suggested there could be certain trigger points to signpost people to advice, potentially through the workplace, such when a pension pot hits a certain size, at age 50, or when a student loan is paid off.
ILC head of economics of an ageing society Ben Franklin said: “An employer is a relatively trusted conduit. It may be simply a case of providing information on how to get hold of a local, regulated adviser, which would in itself be a step forward.
“A lot of people will just Google where to get advice and who knows what they will find at the end of that. We could end up with an increase in scams if people don’t seek regulated financial advice and end up going to fake intermediaries. There is a role there for employers as an information point, to act as a hand-off to a regulated adviser.”
Royal London director of policy Steve Webb suggested there could be lessons from flexible working obligations which could be applied to advice in the workplace.
He said: “When the Government gives people legal rights to things like flexible working, they tend not to make it a mandatory thing that the employer has to give. They give people a “right to request”. If you can make it clear people have a right to request access to financial advice, and make them aware of that and nudge them, something like that could work.”
Pimfa strategic adviser Chris Hannant said there are advice firms that are happy to work with larger employers as they gain enough new clients through the process. He said workplace advice could be extended to smaller firms if they are grouped together, perhaps facilitated by an organisation like the British Chambers of Commerce. Hannant argued this would make it worth advisers’ while by achieving “criticial mass”.
But Hymans Robertson partner Chris Noon said employers are already supporting advice, particularly through the use of initiatives such as the advice allowance.
He said: “The fact is people still won’t take advice. These solutions still only deliver advice to the people taking advice anyway. We need something more mandatory than a ‘right to request’, and this needs to be enforced in some way.”
Benefit of advice versus not taking advice in assets and financial wealth
Increase in pension income for those who had received advice between 2001 and 2007
Number of household interviews carried out to create underlying data on which value of advice research is based
Estimated number of people that received professional advice between 2012 and 2014
Proportion of people who sought advice between 2012 and 2014 from either an IFA or self-employed adviser
Source: ILC-UK, Office for National Statistics