Investing
DIY investors cite advisers’ product knowledge as key attraction
More than a third of do-it-yourself (DIY) investors say a financial adviser’s knowledge of products, including tax and charges, is the most valued part of their service.
According to a study by Prudential of DIY investors – those who self-select the majority of their investments – an adviser’s product knowledge is the most valued aspect of advice according to 34%, ahead of a fifth who feel the adviser’s track record is worth paying for, and 9% who value specific knowledge about different asset classes.
Investors who no longer use an adviser cite perceived lack of value and upfront charges as key reasons for moving to DIY, particularly those with less than £20,000 invested.
One quarter of these investors recognise that financial advisers offer value, but say they can’t afford to pay the upfront charges.
However, those with higher sums invested – £100,000 or more – are most likely to have stopped using a financial adviser either because they feel confident in making financial decisions on their own – 70% – or because they don’t receive value for money – 52%.
Prudential head of business consultancy Paul Harrison said: “Attracting new clients is vital as financial advisers face the new advice landscape. Shedding light on what DIY investors value from financial advice – and also what turns them away from using an adviser – could be hugely useful in helping advisers to demonstrate the value they can add, and thereby win new clients.
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“Articulating a proposition in terminology that matches what’s important to prospective clients has never been so important.
“Adapting traditional messaging could therefore go a long way towards helping to engage prospects in a constructive advice conversation. For example, offering advice on how to help clients make tax-efficient investments may be more effective than simply offering to identify the right products for their needs.”
The Prudential research also shows that high net worth investors are twice as likely to consult an adviser as someone with smaller amounts to invest.
Two in five of those with over £250,000 invested still consult an adviser for financial planning, compared with one in five of those with less than £20,000 invested.
A quarter of people investing between £20,001 and £50,000 still consult an adviser, rising to 31% for those with £50,000 to £100,000 invested, and 33% for those with £100,001 to £250,000 invested.