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CONSUMERS AND FINANCIAL ADVICE - UK - JULY 2018

Published By :

Mintel

Published Date : Jul 2018

Category :

Banking

No. of Pages : N/A

New regulations have caused compliance headaches for advisers, but moves to increase transparency and provide clarity over what services are provided by financial advisers should be embraced and used to better highlight the benefits of advice.
Table of contents
OVERVIEW
What you need to know
EXECUTIVE SUMMARY
The market
The number of advice firms reporting to the FCA grew by 163 last year
Figure 1: Total number of firms and revenue earned by firms advising on retail investment business, mortgage business and non-investment insurance business, 2013-17
The consumer
28% have used financial advice in the last three years
Figure 2: Sources of financial advice used in the last three years, April 2018
Consumers are most likely to interact with products that dont require advice
Figure 3: Products arranged in the last three years, April 2018
Mortgages are the most-advised products
Figure 4: Products where professional advice was used, April 2018
Figure 5: Use of professional advice for each product arranged in the last three years, April 2018
Cost is the key barrier to using financial advice
Figure 6: Reasons for not using professional financial advice in the last three years, April 2018
Around half are willing to pay for advice for some sort of financial product
Figure 7: Willingness to pay for financial advice for different products, April 2018
Online services have growing appeal but face-to-face advice is still preferred
Figure 8: Willingness to pay for different financial advice channels, by product that people would be willing to pay for advice for, April 2018
Consumers want providers to do more to explain the benefits of advice
Figure 9: Attitudes towards financial advice, April 2018
What we think
ISSUES AND INSIGHTS
The need to reassert the advantages of advice over guidance
The facts
The implications
People are warming to online services but still consider them a cheap imitation
The facts
The implications
THE MARKET WHAT YOU NEED TO KNOW
The number of advice firms reporting to the FCA grew by 163 last year
Firms meet new regulatory requirements
THE FINANCIAL ADVICE MARKET
The number of advice firms reporting to the FCA grew by 163 last year
Figure 10: Total number of firms and revenue earned by firms advising on retail investment business, mortgage business and non-investment insurance business, 2013-17
Financial advisers account for 42% of firms
Figure 11: Share of financial advice firms, by type of firm, 2017
Complaints rise to highest level since 2013
Figure 12: Number of complaints made to financial services firms associated with advising, selling and arranging, 2013-17
driven almost entirely by a resurgence of PPI disputes
Figure 13: Number of complaints made to financial services firms associated with advising, selling and arranging, by product type, H2 2017
REGULATORY CONTEXT
MiFID II takes effect
alongside a new definition of advice
GDPR forces advisers to look at client communications
FCA raises concerns following reviews of automated advice
COMPANIES AND BRANDS WHAT YOU NEED TO KNOW
Firms continue to see acquisitions as key to growth
Established providers and challengers continue to develop automated services
COMPETITIVE STRATEGIES
Firms continue to see acquisitions as key to growth
Providers developing advice services in the FCA sandbox
High street banks and automated solutions
THE CONSUMER WHAT YOU NEED TO KNOW
28% have used financial advice in the last three years
Mortgages are the most-advised products
Cost is the key barrier to using financial advice
Around half are willing to pay for advice for some sort of financial product
Online services have growing appeal but face-to-face advice is still preferred
68% think providers should do more to explain the benefits of advice
SOURCES OF FINANCIAL ADVICE AND GUIDANCE
28% have used financial advice in the last three years
Figure 14: Sources of financial advice used in the last three years, April 2018
Cost concerns exclude lower earners from the market
Figure 15: Use of professional advice services* in the last three years, by annual household income, April 2018
People tend to rely on one source of advice
Figure 16: Number of sources of financial advice and guidance used in the last three years, excluding Friends and/or family, April 2018
Figure 17: Sources of financial advice used in the last three years, by number of sources of financial advice and guidance used in the last three years, including Friends and/or family, April 2018
PRODUCTS ARRANGED AND USE OF ADVICE
Consumers are most likely to interact with products that dont require advice
Figure 18: Products arranged in the last three years, April 2018
Pensions and retirement planning reliant on informal guidance
Figure 19: Sources of financial advice used in the last three years, by people who arranged a pension or retirement planning in the last three years, by April 2018
28% of advice clients discussed savings in the last three years
Figure 20: Products where professional advice was used, April 2018
but mortgages are the most-advised products
Reliance on advice deters potential investors
Figure 21: Use of professional advice for each product arranged in the last three years, April 2018
Banks remain a major source of advice
Figure 22: Sources of financial advice used in the last three years, by products for which advice was used, April 2018
BARRIERS TO USING FINANCIAL ADVICE
Cost is key
Figure 23: Reasons to not use professional financial advice in the last three years, April 2018
but consumers are equally driven by a desire to do it all themselves
Figure 24: Consumers who did not use professional financial advice because they would rather rely on my own knowledge/research, by age, April 2018
Is guidance distorting perceptions of the value of advice?
Figure 25: Selected reasons to not use professional financial advice in the last three years, by sources of financial guidance used in the last three years, April 2018
WILLINGNESS TO PAY FOR ADVICE
Around half are willing to pay for advice on a financial product
Figure 26: Willingness to pay for financial advice for different products, April 2018
Wealthier consumers more likely to pay for advice
Figure 27: Willingness to pay for financial advice for any financial product, by value of savings and investments, April 2018
but mortgages pique interest among those with lower value assets
Figure 28: Willingness to pay for financial advice for a mortgage, by value of savings and investments, April 2018
Previous experience of advice increases willingness to pay
Figure 29: Willingness to pay for financial advice for different products, by whether consumers have used professional financial advice* in the last three years, April 2018
WILLINGNESS TO PAY FOR ADVICE CHANNELS
Consumers are opening up to online services
Figure 30: Willingness to pay for different financial advice channels, by product that people would be willing to pay for advice for, April 2018
but face-to-face appointments are most valued
ATTITUDES TOWARDS FINANCIAL ADVICE
Make the benefits clearer to increase take-up of advice
Figure 31: Attitudes towards financial advice, April 2018
Two in five are willing to use an automated service
Figure 32: Agreement with the statement Id be happy to use online advice that gives automated recommendations based on my personal and financial information, by age, April 2018
Consumers generally against the idea of regular check-ups
APPENDIX DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology

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