"As an industry, it seems that we are still falling short in terms of encouraging more consumers to seek professional advice, highlight its benefits and the value it can add."
As a child of the pre-internet days, technology has opened my eyes to a whole new world of information. Most of which has been enlightening and some not so much.
The internet is a beast which arms people with all sorts of information but it’s often how you interpret this information and act on it that really counts. With so many products and services available online, it can be tempting for people to just dive into purchases without conducting their due diligence or seeking advice from specialists who actually know what they are taking about. And this is especially relevant for people making decisions regarding their financial futures, be this for house purchases, protection, investments or pensions.
Which leads to the question – are enough people taking advantage of the variety of specialist professional advice currently on offer?
According to research from Sanlam UK, around one in five (19%) high net worth (HNW) individuals - those with more than £100,000 in savings and investments, excluding pensions - have never spoken with a financial adviser. The data also revealed that just a quarter (25%) of HNWs have spoken with a financial adviser in the last year.
While HNWs are more than twice as likely as those with smaller savings pots to have spoken to a financial adviser in the past decade, even then, over a quarter (28%) of those with significant wealth have not done so. Almost two-thirds (60%) of those that have not spoken with a financial adviser said it was because they can "do it themselves", just under a third (31%) said it was because they did not trust financial advisers, and one in five (20%) shunned advice as they thought it would cost too much.
The value of good, professional advice is arguably higher than it’s ever been across many sectors of financial services, and this is certainly the case within the mortgage market. Increased levels of complexity and competition across all sectors – for borrowers and intermediaries – have opened the door to a world of choice and opportunity, a combination which can baffle and entice consumers in equal measure.
This is the kind of message that the industry has to convey. There are a number of trade associations out there who are doing a great job in terms of educating and protecting their members and there are a number of commentators championing the value of advice. But, as an industry, it seems that we are still falling short in terms of encouraging more consumers to seek professional advice, highlight its benefits and the value it can add.
In the buy-to-let world, it’s clear that we are moving towards a marketplace which – due to tax and regulatory changes - is increasingly being dominated by portfolio landlords. In previous times, many portfolio landlords have also embraced the ‘do it themselves’ attitude. However, as the sector evolves, a greater proportion are realising how challenging and multifaceted the modern BTL marketplace has become in terms of maximising yields and minimising costs.
A good BTL adviser will not only be able to recommend the best finance deal for landlords but also build up a picture of their overall business and personal financial circumstances to help prioritise potential portfolios additions, future sales or the diversification of risk. They will also have strong affiliations in place with other market specialists to support them with their tax and pension requirements – amongst other things.
So, as an industry, let’s talk more and shout louder around the value of the financial advice process. Especially at a time of year when more and more people may well be feeling the financial pinch.