Advisers and consumers are sceptical about the proposed regulation to widen access to financial advice, a study by The Lang Cat has found.

It revealed that just 9 per cent of people were benefiting from financial advice, with a lack of trust in advisers (31 per cent) and value perception (33 per cent) acting as the biggest barriers to take-up.

The Advice Gap study featured YouGov research among 2,000 adults and a survey by The Lang Cat of 210 advisers.

It highlighted recent proposals from the Financial Conduct Authority (FCA), as part of its Advice/Guidance Boundary Review (AGBR), for financial service providers to give ‘targeted support’ to consumers.

However, The Lang Cat’s research found that just 13 per cent of consumers believed they would find the initiative useful, while a quarter of advisers did not think the proposals would have a positive impact on consumers.

Despite the scepticism, half of advice firms said they were likely to offer these services once the regulation had been introduced.

There was also some interest among consumers for simplified or pay-as-you-go advice models as part of the AGBR, with 57 per cent being either fairly or very interested in advice for one-off events, such as arranging a will or mortgage, rather than ongoing advice.

Consumer Duty

Two years on from the introduction of Consumer Duty, two thirds of advisers feel regulation is making it harder for them to serve less wealthy clients, according to the study.

Half revealed that they were stopping services with ‘accidental advice gap’ clients, who make up an average 11 per cent of their customer base, rising to 17 per cent for smaller firms.

Looking at potential solutions, advisers saw opportunities through technology to support clients with simpler needs.

Over 55 per cent believed offering advice services via digital channels would expand their customer base and 30 per cent felt they would be able to service less wealthy clients.

“Just 9 per cent of the population has benefitted from paid for advice over the past two years and as an industry, we all aspire for that figure to grow,” commented The Lang Cat consulting director, Mike Barrett.

“Despite the headline, there is lot to be positive about. The fact that an overwhelming 91 per cent of those who took advice found it helpful, shows levels of customer satisfaction that any other profession would dream of.

“Two areas of concern remain - firstly the alarming lack of awareness among the majority of the population as to the benefits of financial advice. And secondly, how the profession is increasingly focused on a narrow segment of the population – wealthy individuals over 50 who are edging towards retirement.

“This isn’t a criticism of the advice profession – the need to service this group is entirely logical and sensible.

“However, the advice gap is most pressing for those who fall outside of this segment, and we believe there is value in understanding the scale of the problem. Only then can we figure out what interventions if any are needed so that we can start to tackle the advice gap once and for all.”

---