close
Survey highlights financial advice gap as young investors miss out

 

In a recent interview with Private Banker International, Lisa Caplan, head of financial advice at digital wealth manager Nutmeg, called for the burgeoning financial advice gap in the UK to be plugged, saying that action is needed: ‘Too few people know what sort of financial advice is available, how it could help them or where to find it,’ Caplan says.

‘Add to this a traditionally prohibitive cost and many people are left making financial decisions on their own.’

Caplan voices Nutmeg’s approval for the Financial Conduct Authority (FCA)’s decision to review the financial advice market, and cites a recent survey that found that people were more likely to seek financial guidance or advice from friends and family than they were to take professional advice; one- third of adults consulted their family over financial matters compared to just 23% who went to a financial adviser.

The research, conducted by YouGov’ also showed that only 13% of people aged 25-34 and 20% of 35-44 year-olds use a financial adviser.

At one level these findings may not appear surprising on the basis that those in younger age groups may not yet have accumulated sufficient levels of wealth to ‘need’ to pay for advice; however, flip that argument on its head and it could be that with a long investment horizon, decisions made early on, with even modest sums, can yield the biggest benefits over the long term.

32% believed they do not have enough money for it to be worthwhile, 24% that they do not need one, and 21% who said that financial advice is too expensive

When it comes to the reasons people give for not using a financial adviser, the survey said 32% believed they do not have enough money for it to be worthwhile, 24% that they do not need one, and 21% who said that financial advice is too expensive.

Nutmeg’s mission is to make investments more accessible to more people – ‘democratising investment’ in the vernacular – helping to dispel the myth that one must have a certain amount of wealth before starting to invest; over time the services of professional financial advisers could also become more universally accessible.

Caplan continues: ‘Good financial advice can make a huge difference to your future – whether it’s picking the right investment, ensuring you’re taking the right amount of risk for you or ensuring you’re making the most of your tax allowances – professional financial advice could help you achieve your goals sooner.

‘In the next few years, the way financial advice is given is going to radically change.

‘People are used to interacting with technology to make so many aspects of their life easier, and financial advice is no different.

‘We’ll only be able to solve the advice gap with greater digitisation.’

As part of its growing suite of products, digital wealth manager Nutmeg launched a personalised advice service in October 2018; the UK’s pioneering ‘robo advisor’ now has 65,000 customers and manages £1.5bn in assets.

financial education

Financial Education: Part 8 – Risk and Reward – Five Popular Portfolio Types

brexit

Brexit Bulletin: ‘Turn to the left, Turn to the right?

Leave a Response

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Be informed as this exciting sector develops and receive DIY Investor Magazine free to your inbox – take control of your financial future