Defining the Financial Advisory Gap in the UK
As many families, individuals and businesses struggle to adapt to an increasingly difficult financial climate, the need for the right advice is crucial – with some 10 million plus furloughed workers, struggling SME’s and with the Manufacturing PMI seeing the most severe contraction ever in recent months – the short-medium term economic outlook is bleak; pension holders, individuals & investors are increasingly looking for ways to safeguard their assets.
The well-established, yet traditional Independent Financial Adviser (IFA) sector is critically important to the financial wellbeing of the UK as it imparts essential support and advice to help protect both individual & family finances. In fact IFA’s often develop a long term relationship with their clients and provide sage advice in a number of areas including pensions, savings, insurances and wealth management.
According to the FCA, some 6 million people use IFA services each year, however, the industry remains technologically poor, lacks automation and with increasing operational costs & low profit-margins – higher service fees are often passed to the customer.
With an estimated, 13 million consumers across the United Kingdom – whilst levels of wealth and asset portfolios differ, the problem of accessing compliant advice during the ongoing crisis remains a growing concern amongst many in government and industry. In short there remains a significant gap between those seeking expert IFA advice and those who are currently receiving the desired expertise.
As the COVID- 19 crisis continues to advance with no end in sight – Increasing numbers of people are now seeking financial advice from the UK’s IFA community but are cut off by high fees of traditional high street IFA’s. The advice gap is a relatively new term to the sector, but one that is becoming more important by the day – it signifies the gap between an ever-increasing demand for regulated financial advice and the numbers actually receiving support from an IFA.
As demand for IFA support rockets in the wake of the global COVID-19 pandemic – accessing the right advice should be accessible to all and as technology develops we will be assessing the means to close this gap. A financially literate nation reaps a number of opportunities and levelling access to advice is an important consideration that the industry must embrace if it is to do its bit to help the UK navigate its way through the economic turmoil ahead.