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UK Consumer Financial Advice 2018: Consumer Research Report

  • ID: 4751484
  • Report
  • Region: United Kingdom, Great Britain
  • 70 Pages
  • IRN Research
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The aim of this report is to study how UK consumers obtain and judge the advice they receive when they make financial investments. This is studied in terms of consumers who currently own investments and consumers who hold money in a form which could potentially be released and invested in investment products (e.g. held in cash or defined contribution – DC- pensions if the consumer is aged 55+). The report considers what types of advice consumer want, where they and how they access advice and how much understanding do they have of the advice process. It also considers how consumer investment behaviour has been influenced by online developments such as Robo-Advice and how the Retail Distribution Review has influenced behaviour.

Currently, 26% of Investors take professional advice, with advice most likely to be sought and taken by wealthy investors who lack confidence in their own investing abilities. But there is potential to expand the consumer financial advice market

Only around one-in-ten Investors say they would never take professional financial advice whether that be from a human or computer (Robo-Advice), indicating the potential to expand the number of Investors getting professional advice. In terms of expanding their target market, advisory firms will be aided by the fact that professional advisors, especially IFAs, are thought of highly by Investors who are currently Unadvised and by the fact that Unadvised Investors clearly have some need for advice, guidance and/or support.

Key findings from the consumer financial advice report

  • Professional advice is used to an above average degree by Investors who are: Risk Takers (own risky investment products), have wealth of £100,000+, are from the AB social grade, are males and are age aged 25-44.
  • Financial advice is primarily sought for investment selection, planning or management and pension selection and planning.
  • Only 41% of consumers feel confident enough or feel they have enough knowledge to buy a financial product or invest without professional help.
  • 39% of Investors using professional advisors use an IFA
  • 21% of Investors are Under Advised (i.e. they need investment support but do not get it).
  • 67% of the Unadvised Investors would find some form of professional advice, guidance or support beneficial
  • Only 44% of consumers (48% of Investors) would know how to start a search for a financial advisor if they wanted one.
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1. Executive Summary

  • Financial advisors used by a minority of Investors
  • With IFAs the most popular type of advisor used
  • There are ample opportunities for advisory firms to expand
  • But the barriers must be overcome
  • Advisors need to consider the potential and threat of online advice and guidance services
  • And go the whole hog and consider launching Robo-Advice services
  • The good news is that advisors are good at their job
  • Meaning their clients must rate them very highly in terms of trust and quality
  • Advisors and their clients mainly have an advisory relationship
  • Barclays, Intrinsic and St James's Place Wealth Management the most widely used advisory firms

2. Introduction

  • Definitions
  • Abbreviations

3. A Brief Introduction to Investors

  • Key findings
  • Three types of consumer
  • Equities and SIPPs the most popular risky investment held
  • Age, gender and income the great discriminators
  • The typical Risk-Taking Investor has £261,000 invested
  • Larger portfolios allow more diversity and risk taking

4. The Advice Mindset

  • Key findings
  • Consumers invest mainly for defensive reasons and this can make them risk averse
  • And for some it results in a lack of confidence when investing
  • But there is a strong independent streak running through Investors
  • Investment confidence drives the approach taken to investing
  • Half of investors don’t have their abilities and their support networks aligned
  • But only around one-in-five Investors are under advised

5. Selecting a Financial Advisor

  • Key findings
  • One third of consumers wouldn’t know where to start
  • Confident, wealthy Investors with diverse portfolios have the easiest task
  • Trust factors the stronger drivers of advisor selection
  • What type of advice do Investors want and do you really want advice?
  • Many Investors are not sure

6. The Current Use of Financial Advisors

  • Key findings
  • IFAs are the most likely type of advisor used
  • Being professionally advised does not necessary mean meeting an advisor regularly
  • IFAs, again are the main advisors consulted
  • Advisors are used primarily on an advisory basis
  • If you get professional help, you also tend to let them press the “buy” button
  • Asset selection is the prime reason why advisors are used
  • Clients are satisfied with the service they receive
  • Most Advised Investors see a Keyfacts document which aids satisfaction
  • Because they aid understanding of the service on offer
  • Flat fee and on-going fees used in equal amounts
  • Advised Investors happier with flat fees
  • Barclays, Intrinsic and St James's Place Wealth Management the most widely used advisory firms
  • Five firms vie for leadership among current Advised Investors

7. The Opportunities and Competitive Challenges

  • Key findings
  • There is potential for an advisor-led guidance service
  • Especially as advisors are considered as the best source of information
  • First advisors must overcome the barriers
  • Will online tools push more Investors into DIY investing?
  • And the fund platform challenge could be greater than this
  • Young, confident Investors are powering the rise of online investing
  • Should advisors embrace Robo-Advice?

List of Figures
Figure 1 The breakdown of consumers based on their investment holdings, 2018
Figure 2 The ownership of investment, pension and cash assets by type of consumer
Figure 3 The average (mean) wealth held by Investors and Potential Investors
Figure 4 The financial and demographic profile of consumer wealth groups
Figure 5 The ownership of investment, pension and cash assets by wealth group
Figure 6 The main motives for investing
Figure 7 Confidence buying a financial product without professional help by type of consumer and wealth
Figure 8 Net confidence* buying without professional help by gender, age and social grade
Figure 9 How consumers approach investing by their confidence in the own investing abilities
Figure 10 How investment affairs are managed
Figure 11 The breakdown of Investors by abilities and advice alignment
Figure 12 Investor abilities and use of professional advice by wealth and type of Investor
Figure 13 Investor abilities and use of professional advice by risky assets held
Figure 14 Under Advised Investors (% of Investors)
Figure 15 The percentage of consumers who know* where to start looking for a financial advisor
Figure 16 What questions are important to ask of a financial advisor?
Figure 17 Investor understanding on the advice on offer
Figure 18 Investor understanding of the difference between advice and guidance
Figure 19 The most favoured types of professional advisor used
Figure 20 The last time a professional financial advisor was consulted
Figure 21 Type of advisor met and type of Investor by timing of the last advisor meeting
Figure 22 The type of relationship Investors have with the firm they consulted with on their last meeting
Figure 23 How Advised Investors wish to execute trades/investment changes
Figure 24 The main areas of discussion during the last meeting with an advisor
Figure 25 How satisfied were Advised Investors with the last meeting they had with a financial advisor
Figure 26 The net satisfaction with advisor services by whether a Keyfacts document was seen
Figure 27 How Investors paid for their advice
Figure 28 The major financial advisory firms by public awareness and use
Figure 29 The classification of financial advisory firms
Figure 30 The use of financial advisory firms by Advised Investors
Figure 31 The topics on which advice, guidance or support is needed by investment approach
Figure 32 The best source of advice, guidance and support to recommend the course of action
Figure 33 The main barriers to using a financial advisor
Figure 34 The barriers to using professional advisors by the confidence of DIY Investors
Figure 35 The percentage of Investors personally using fund platforms
Figure 36 The percentage of owners of specific risky investments that use fund platforms
Figure 37 Use of individual fund platforms/investor services by Investor Mindset
Figure 38 The change in use of online investment platforms and services
Figure 39 Net % increasing their purchases via fund platforms by Investor demographics
Figure 40 Net % increasing their purchases via fund platforms by Investor characteristics
Figure 41 The willingness of Investors to use Robo-Advisors
Figure 42 The willingness of Investors to use Robo-Advisors by type of Investor

Note: Product cover images may vary from those shown
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  • Barclays
  • Intrinsic
  • St James's Place Wealth Management
Note: Product cover images may vary from those shown