Changes over the past two years in the structure of the financial advice market have resulted in some five million fewer people having a main financial services adviser, according to the Financial DIY report, jointly produced by ComPeer and JGFR.
At the same time trust in the quality of financial advice has ebbed away.
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In the year before (2012), and the year after the introduction of the FSA’s Retail Distribution Review abolishing commission (2013), the impact has been considerable. Many advisers have left the industry with millions of consumers not prepared to pay £100-£200 an hour upfront fees.
The report shows a further shift to Financial DIY in 2013 with 57% of the public non-advised, up from 54% in 2012 and just 23% taking professional financial advice, down from 29% in 2012.
More people have reverted to seeking advice from friends and family (15%), up from 14% in 2012 and from ‘other’ – likely to be direct-to-consumer platforms – up from 1% in 2012 to 4% in 2013.
While only a small minority of people (6%) are prepared to pay sizeable up-front fees for financial advice there is a growing proportion prepared to pay a discretionary management fee and a bundled fee in the product cost. This suggests less attrition of financial advisers in 2014 so long as trust can be regained.
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By GlobalDataThe report also identified more people accessing investment information, research and guidance online, increasingly through mobile devises with greater activity on execution only platforms. Having mobile-friendly portals will be essential for professional advisers and self-directed financial businesses.
Managing pension pots will also become a key issue with nearly a quarter of consumers having control over their investments. Gains in pension pots in 2013 are likely to have helped boost the numbers of people with over £50,000 in investible assets during the year.
