INNER WORKINGS REACHING THE 90%
by Tom Murray Head of Product Strategy LifePlus Solution, Majesco A recent survey by the FCA revealed that less than 10% of UK adults had received financial advice in the last year. This is a truly shocking statistic and brings home the extreme nature of the advice gap – not so much a gap as a chasm. Clearly the push by governments worldwide and particularly here in the UK to make people more self-reliant financially is going to flounder unless we can find ways to resolve this. Reaching the 90% who haven’t accessed financial advice lately- many of whom have never received advice - is key to rolling back the necessity for sate involvement in supporting people, particularly in their old age. This is a vital factor for society as populations age and governments struggle to contain the cost of social support. To reach out to this huge section of the market, we need to understand what has created such a substantial gap in the first place. Firstly, there is definitely a supply problem. Given that most financial advisers report themselves as very busy, there is clearly nowhere near enough spare capacity in the system to cover a gap that size. And the industry is not flush with new wannabe recruits – certainly not the scale needed to solve this problem.
Of course, there is a bit of a Catch-22 situation here; so few people use financial advisers regularly means that awareness of the profession is low in general, inhibiting recruitment. In addition, many would-be consumers are put off by the cost of the service. Given the rise in professional standards mandated by the regulator, financial advisers now are very qualified, but with this level of qualification comes dearer per hour costs. Thus many believe that the price of financial advice is disproportionate to the amount of money they have to invest. Finally, there is the problem that without exposure to the financial services sector, lots of people don’t appreciate the number of products that are available and how they would benefit from them. As a result, they are not aware that they are missing out. This is a another Catch-22 situation, as without advice, how can they understand the benefits that advice brings. Technology is the key that can unlock the wonders of financial services to the masses. Whilst training an individual adviser is expensive, it is cheaper than the process required to automate it. However, time is a restricting factor in one-to-one scenarios and
