Is financial advice too expensive?
The ‘affordable advice gap’ is where people are willing to pay for advice but think it is too expensive. Research by online financial advice service OpenMoney found the gap to be at a record level. It found that an estimated six million Brits would pay for advice if it cost less, up from 5.3 million last year.
OpenMoney’s third annual advice gap report, The future of financial advice: moving past the advice gaps, takes a detailed look at the reasons some people are willing to take financial advice and why others are not.
It found that among people who have not paid for advice in the past two years and would be unlikely to do so in the future, women are more cost-conscious than men. A fifth (20%) of women said they would be willing to pay for advice if it cost less, compared with 14% of men.
Young people were least concerned about cost, with just 11% of 18 to 24-year-olds identifying it as an issue, compared to 20% of those aged 35 to 44.
Although cost remains a significant concern, trust and value are more important when it comes to encouraging people to pay for advice.
A third (33%) of respondents who would be unlikely to consider paying for financial advice, having also not done so in the past two years, said they would need to be convinced that advice would save them money. A further third (32%) would need to be sure they could trust the advice.
Anthony Morrow, co-founder of OpenMoney, said: “Although the affordable advice gap has increased, our research found that trust and value are far more important than cost to both genders and all ages. People want to be convinced that taking advice will make a difference to their finances and save them money overall.
“Trust has long been an issue in the advice sector: memories of a sales and commission driven culture at some firms and an over-reliance on complex products and jargon have damaged people’s view of all advisers. Restoring people’s faith in the benefits of financial advice is therefore crucial to closing the advice gaps.”