Financial services hasn’t quite reached the same level of self-service as grocery shopping (and nor should it), though with the growth of D2C platforms and the mass market discretionary service offered by Nutmeg, the technology analogy has some truth to it.
Financial advice is an important service that comes at an additional cost – and in a post-RDR landscape, we should now be able to define exactly what those costs are.
In its widespread survey of investors, both with and without financial advisers, independent research firm Gliocas found the public appears to becoming more investment savvy, increasingly using online outlets, tools and social media to undertake their own investment research.
Splitting affairs
“Increasingly, even advised clients are using D2C platforms, splitting their financial affairs between a professional adviser and a D2C platform,” says Lee Robertson, a partner at Gliocas, and chief executive at Investment Quorum.
“This has implications for advisers who have been used to having complete oversight of a client’s affairs as well as for those product providers who wish to have a presence on these platforms.”
So what the main reasons for seeking advice? According to the Gliocas survey, it is pensions and savings advice (61.8%) rather than on investments (34.1%) that is in highest demand.
Despite the findings of a recent YouGov report, which stated that the investing public would not seek out professional financial, investment or taxation advice; this is not born out by the Gliocas research.
“The respondents, by a majority of around two-thirds, definitely would or possibly would seek out advice on their pension options and the surrounding tax issues,” adds Robertson.
Park the Lamborghini
“Lambasting the Lamborghini comment, much has been made of whether investors would ‘cash in’ their pension pots for fast cars, wine, luxury goods and the like. Within the research only a very small percentage would actually do so.
“Interestingly, virtually a quarter of all respondents had no intention of cashing in their pension at all. The inheritance tax implications of the incoming rules appear to be of more than a passing interest to many investors.”
And, RDR? The industry has toiled and sweated in dealing with the changes which itself called for in order to introduce greater professionalism. But while we are all presumably now up to speed, should there have been more effort made to educate the man or woman on the street?
The Gliocas research suggests that overall consumer knowledge and understanding of the changes brought about by RDR remains poor, though among advised clients the understanding of RDR was much greater. When asked if they felt informed about its aims, 76.8% of those with an adviser said yes, compared to just 28.6% without.
Still plenty of work to do then though it shows that, at its best, financial advice can do more than just guard a person’s wealth.
You can read more from the Gliocas research in the forthcoming May edition of Portfolio Adviser, our next week.
