Last year we held a number of successful events with Fairstone and Gillian recently attended their conference and celebration of 10 years in business!

At the conference, Stacey Ridley, Head of Marketing talked through a Whitepaper which was produced following a consumer survey. The survey looked at consumer attitudes towards financial planning and themes for 2018.

Lee Hartley, CEO at Fairstone highlighted in his introduction to the paper that:

“The results of the survey were surprising and it is extremely worrying to see that the level of financial engagement amongst a representative portion of the population seems to have deteriorated. Despite the headlines and promotion of automatic enrolment and pensions freedoms it is staggering to see that more than half of the people we surveyed did not have a retirement plan in place. In addition, in such a volatile political environment and with markets still so uncertain it is disappointing that respondents were reviewing their savings and investments less frequently than in our original survey (2010). We understand that pensions are a complex area of savings but we would urge people to seek advice and not ignore such an important part of planning for retirement.”

The headline results which lead to Lee’s comments are:

» 52% of respondents currently do not have a retirement plan in place compared with 37% in 2010

» Almost a quarter of respondents, 23% had no savings or investments at all

» 24% of respondents had a pension in place which would provide all the income required – down 9% on 2010

» 10% reduction in those that have engaged a financial adviser over the last seven years

Clearly the survey identified that there are opportunities for the financial adviser community which Fairstone identified as Education, Engagement and Endorsement. It’s worthwhile looking at each of these in turn.

 

Engagement

There has been a 10% decrease in respondents who have used a financial adviser to review their personal finances and 28% didn’t know where to look to seek financial advice. When asked about what would influence their decision to use an adviser, cost was the most important factor closely followed by trust and recommendations from family and friends.

Perhaps this result is a result of the Retail Distribution Review (RDR) and the subsequent increase in transparency around costs and fees. Despite significant improvements in articulating the value of advice to clients, there appears to be some way to go.  Perhaps as an industry, more is required to raise awareness amongst consumers around the role of the financial adviser and the impact their support can have.

Of the people holding investments only 48% of them take time to review these (down 9% on the last survey)

Can we  therefore not only better educate the public on why it is important to seek financial advice and have a plan in place but also the benefits of reviewing their savings and investments and the value that professional advisers can add in that process?

 

Education

Respondents didn’t fully understand a lot of the terminology commonly used to describe pensions. As an example, 70% of 55-75 year olds had heard of an annuity compared to only 35% of 25-34 year olds.

52% of respondents have no retirement plan in place but 82% indicated that they have a company workplace pension. This feels like a disconnect around what constitutes a retirement plan and 25% of people indicated that they are looking to retire between the age of 50 and 55 feels like another disconnect as to how this retirement might be funded.

In addition, whilst 75% of respondents had savings or investments, 66% held cash savings which imply that fewer people are looking at the longer term preferring easy access cash to tied-in investments and may also be a reflection of the trust people place in cash during times of political uncertainty,

Perhaps we therefore need to consider the following:

» How to show the value of financial planning and highlight the importance of starting to plan early

» Can we demystify investments?

» Can we educate the public on why it is important to review their savings and investments and that professional advisers can add value?

 

Endorsement

It is estimated that there is around £400 billion to be passed from grandparents to the younger generation over the next 10 years suggesting that there has never been a greater need for financial advice.

The survey highlights that people are less informed about how they can impact their financial future and as a result are engaging less with their finances and with financial advisers.

With 25% of those that did seek an adviser choosing cost as the overriding factor influencing their decision, Fairstone believe that this indicates that immediate fees are more important than the longer-term objectives of effectively managing their portfolio.

Trust, reputation and recommendations from family and friends were all seen as almost equal to cost but twice as important as locality and brand which demonstrated the power and importance of endorsements.

Dr Matthew Conell, Director of Policy and Public Relations and the Chartered Insurance Institute (CII) in his foreword to the paper writes, ‘we have a job to do to persuade people of the benefits of making a plan and getting hep with managing their finances, and we have to do this at a time when public trust is in short supply in any walk of life. The paper takes a big step towards achieving this – making a clear, evidence-based case for the benefits of advice and listening carefully to what consumers are telling us about the barriers they face when planning for the future.’

You can access the full paper here and if you have any comments and thoughts then do post them below.