Price of financial advice remains a major obstacle for consumers

23rd November 2015

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UK consumers are unwilling to fork out for financial advice until they have an investment or pension pot totaling some £121,000 – four times the £30,000 advisers believe is required to make guidance worthwhile, claims new research.

The analysis from Aegon found that just 6% of the adults agree with the adviser community that a savings or pensions pot of £30,000 is worth paying for advice on.

When it comes to how much the UK is willing to spend on advice, there is little correlation between the value of the assets and how much people are willing to pay.

When faced with deciding where to invest £50,000, people are willing to pay, on average, £191 for advice.  However, the insurer’s survey found that when it comes to deciding where to invest a pot of £250,000, people are willing to pay £314, just £123 more, despite the pot being five times bigger.

The government and Financial Conduct Authority are presently consulting on how to extend financial advice to a broader audience as part of its Financial Advice Market Review and it is apparent that it is not just the cost of advice where adviser and consumer views vary.

Aegon’s study highlighted there is also a difference of opinion on the main benefit of taking advice. Two fifths, at 42% of consumers believe that the potential to grow their investments is the biggest advantage, while over a quarter, at 28% felt the main benefit of taking advice was the feeling that they had made the best decision for their circumstances.

However, it is peace of mind that advisers see as the main benefit for consumers, both in the knowledge that consumers have been advised by an expert and also the consumers’ right to complain to the Financial Ombudsman Service if they are unhappy.

Duncan Jarrett, managing director, Retail at Aegon UK said: “There is a significant gap between what consumers believe they need to have saved before they seek advice, and the amount advisers believe is required to make advice worthwhile. The government’s consultation on methods of extending advice needs to look at ways of reframing consumer thinking.

“Take a household example, as a car gets older many people opt for an annual service which can spot potential problems early. While it involves a regular cost, it could pay you back many times over if it prevents a major expense at a later date. The same is true of advice, when people understand that the cost is potentially securing them a much more comfortable retirement or removing a major worry, then the value becomes apparent.”

1 thought on “Price of financial advice remains a major obstacle for consumers”

  1. Jive Bunny says:

    I got “advised” years ago to take out an endowment! How did all that work out? Oh yes it cost me £15000.00 in today’s terms , so much for ” the value becomes apparent.” or indeed ” it is peace of mind that advisers see as the main benefit for consumers,
    both in the knowledge that consumers have been advised by an expert and
    also the consumers’ right to complain to the Financial Ombudsman
    Service if they are unhappy.”

    I complained to the Ombudsman about the endowment who decided that as I had been financially prudent and had managed to overcome the …er…”value” of the “advice” I was given this meant I didn’t need any help!!!!

    The best way is to go it alone and whatever you do DON’T LISTEN TO SO CALLED “FINANCIAL ADVISERS” OR “EXPERTS”.

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