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Beverly Chandler

Research finds perceived cost puts people off taking financial advice

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Research from Old Mutual Wealth and Intrinsic finds that the perceived cost of financial advice is the main factor discouraging people from seeing an adviser and consumers have unrealistic expectations about the price they can expect to pay for such advice. 

When asked to select factors that discouraged them from taking advice, 37 per cent of those surveyed said that ‘the cost of getting advice’ was an issue that put them off seeing a financial adviser. Asked what they would be prepared to pay for advice, 44 per cent said that they would not be prepared to pay a fee. A third (33 per cent) said they were unsure and 15 per cent said they would pay only up to GBP250.
 
Old Mutual Wealth and Intrinsic put the findings of their research against the news this week of a Government consultation on consumer access to financial advice, with a special focus on helping those with ‘limited wealth.’
 
Published by the FCA and HM Treasury, the consultation paper says the Government will examine ‘areas where consumer demand is low because the long-term benefits of advice may not be fully appreciated’. It will also look at the reasons why advice is sometimes ‘perceived to be poor value for money…even if such advice could be of real benefit.’
 
According to the data, collected through YouGov, the other significant barriers discouraging people from taking advice included:
 
One-third (33 per cent) said they did not believe they had enough wealth for an adviser to help them; 31 per cent feared ‘paying for something they didn’t need’; 30 per cent said they believed advisers may be biased toward some products; 19 per cent were unsure which advisers to trust; 15 per cent weren’t convinced an adviser could offer value; 16 per cent said they thought it was hard to know which adviser would give them what they need.
 
According to the survey, only one in five (20 per cent) said they saw no barriers preventing them from speaking to an adviser. Intrinsic chief executive Richard Freeman says: “The data shows we face a challenge demonstrating the value of advice to consumers. It is important for Government and the financial adviser community to work closely together to ensure more people can access the benefits of professional financial advice.
 
“Advice allows people to plan a sustainable retirement income strategy and protect their family if they become unwell or unable to support them. To many people, paying for advice can feel like a fee to shelter themselves from tomorrow’s problems. As a result, some put-off taking advice or choose not to take it altogether.”

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