One in three adults say that they would rather seek financial advice from friends and family than a professional adviser, according to research by financial advisory business Foster Denovo (fosterdenovo.com).
In a survey of 2,002 people aged 20-55, 29% said they go to loved ones for financial counsel rather than a professional adviser.
The removal of adviser commission with the introduction of the Retail Distribution Review in 2012 has been widely credited with limiting access to advice for those with less assets.
It is therefore perhaps unsurprising to see that the main reason people were not seeking professional advice was because it was seen as being “too expensive”, according to 34% of respondents.
Since 2013 new entrants including ‘robo-advisers’ have made ground in closing this gap though and bringing more affordable professional advice solutions to market.
These figures, coupled with the fact that 14% of respondents say they shun professional advice because they do not trust advisers, should be a cause of concern for the industry and highlight the size of the task it has in proving its worth.
The research shows that internet search engines such as Google and Bing were also popular sources, with 25% of people consulting these for financial guidance. While personal finance websites such as Moneysavingexpert were used by 23% of those surveyed.
However, encouragingly 72% of people who sought professional advice said it had improved their finances.
Roger Brosch, CEO at Foster Denovo, said: “Many of the findings from our research make for concerning reading but they are not necessarily surprising. Sound advice is key to a secure financial future and it is encouraging to see that many of those who have sought advice, agree with this sentiment. It is clear that for many, cost remains a barrier and effective solutions must be found to engage with everyone in a way that works for them, providing the information and confidence they need to take suitable action.”
“We are living in an age where we have limitless information at our finger tips. While some of this is undoubtedly useful, it should always be considered in the context of an individual’s personal circumstances. In our view, particularly for the important life decisions, there is no substitute for professional financial planning. Our sector will only truly thrive when we are able to engage and implement effective intergenerational planning, and that requires us to constantly innovate and adapt to the changing needs of younger clients who will wish to interact differently in future. We must respond to this challenge positively and proactively and build the bridge that will support high quality financial planning both now and for future generations.”