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Discussing financial planning is no longer a ‘taboo’, despite one in two UK adults reporting not seeing an adviser in the last five years or more

Advisers must continue to adapt and understand the requirements of potential new customers of financial planning as 57% of people reported not seeing a financial adviser in at least 5 years.

The consumer research conducted by AKG earlier this year1 and co-sponsored2 by Canada Life revealed that financial planning is no longer the ‘taboo’ subject around the dinner table as 40% of survey respondents reported discussing financial planning with family or friends in the past year. The impacts of coronavirus may well act as a catalyst for more discussions as 29% reported having such a discussion in the last month because of the effects of the virus.

The majority of advisers’ business models today cater to retirees that can be classed as ‘Financially Mature and Stress Free’ - those with strong financial foundations due to good fortune in their family and working lives. However, this group makes up just 21% of the market today and is expected to decrease as a proportion of the total market over the next 15 years*.

To weather this decline, the research shows that advisers could work harder to communicate the value and benefits of their service, as 27% of consumer respondents simply didn’t see it as a service they should pay for. The survey also revealed that 43% of consumers favoured a DIY approach to their finances and 20% were concerned about being targeted by pushy sales techniques.

However, the picture was more positive amongst those who have received financial advice, 55% of this subset said the greatest benefit is the ‘peace of mind provided by their relationship with an adviser. This was followed by, ‘access to ongoing support’ and ‘ideas on finances/investments’ which were selected as other key benefits of advice by 48 and 42 per cent of respondents respectively in this subset.

The research also highlights that navigating retirement effectively is still a concern for many as 39% of respondents said they would consider paying for advice at this time. Inheritance planning and ongoing advice around pension planning were the next most significant with 32 and 31 per cent of the vote respectively.

Andrew Tully, technical director, Canada Life said:

“These results have provided an interesting snapshot on the potential clients for advisers today and, crucially, tomorrow. With future customers looking to DIY approach to financial planning the onus is now on advisers to highlight not only the great service they provide but also the priceless ‘peace of mind’ they can offer.

“I’m not surprised to see retirement planning emerge as a key concern for potential customers. The combination of pension freedoms and auto-enrolment creates a significant pool of opportunity for advisers as millions face more complicated questions around how much to save, when to retire and how to pass on wealth to the next generation.

Matt Ward, communications director at AKG said:

“Evidently discussing finances is not taboo, rather it is prevalent, and for some it has evidently been necessitated by COVID-19. But the big question for the industry is: how do we convert more of this interest and these discussions with friends and family into meaningful engagement with financial advisers where these relationships are not in place? Or at least into meaningful engagement with other financial services solutions, i.e. DIY, guidance?

“From a pure marketing and key messaging perspective it seems clear that the industry could do a better job of communicating the benefits and value of financial advice. And the consumer research shows that there is definitely some ammunition there to be used from their key supporters.”

 

 

* Canada Life research with Trajectory (September 2020)