Financial services must do more to narrow the advice gap in the UK as currently 56.5% of individuals are not accessing financial advice, according to GlobalData, a leading data and analytics company.
GlobalData’s latest report: ‘Customer Engagement with Financial Advice’ states that the industry should seek to engage those currently underserved in the advice space. While accessing advice at present is generally reserved for the wealthy, advice can benefit all individuals, helping empower them and their finances.
Danielle Cripps, Financial Analyst at GlobalData, explains, “Affordability is huge a barrier which can be overcome by advice services investing in technology. Developing digital solutions will provide advice for a cheaper fee in addition to giving customers more frequent and convenient access to services to monitor and manage their finances. Advisors should seek to use technology to build meaningful, long-term relationships with customers to help them actively achieve financial goals.”
Advisors can use technology to offer different levels of service with varying fees. Basic, digital-only solutions can be developed for a low price. Hybrid solutions can be developed which supplement a primarily digital service with advice from a human, or customers may wish to have a full-service proposition for a higher fee.
Regulators must work with the industry to improve access to advice through a top-down approach. They must educate, encourage, and invest in players to develop technology. Initiatives such as the Financial Conduct Authority sandbox must be given greater emphasis and funding, for example.
Cripps continues, “Millennials are already using apps to manage their budget and finances. If the industry fails to move towards digital solutions, it will fail to engage millennials and future generations with financial services and advice as they age and accumulate wealth.
“The winners in the advice space will be those that build digital-led solutions now. At present there is no specific pocket in the market that is dominating this space. All have an equal opportunity to grow – whether this is banks, advisors, brokers, insurers, or start-up robo-advice providers, meaning all have the potential to disrupt the market.”
Information based on GlobalData’s report: Customer Engagement with Financial Advice