Unlocking the £185bn adviser opportunity

Around 39 million adults in the UK fall into the advice gap. We  believe our industry has a responsibility to change that.

In our latest research, we reveal the potentially significant adviser opportunities that reside within the advice gap. 

We also dig into why millions of customers miss out on the proven benefits of money advice – and how our industry might work together to connect more people with the help they need.

Listen to an industry view on our research

In this podcast we debate the key findings from our research with some industry experts and commentators. We dig into the adviser opportunities, the industry challenges and the overriding need to work together.

Clare: Hello and welcome to our podcast. My name is Claire Moffat, and I'm the Head of Intermediary Development and Technical at Royal London. Today, I'm delighted to be joined by three guests. Jamie Jenkins, who is our Director of Policy and External Affairs here at Royal London, Ben Wright, the Director of Strategic Development at Tenant Group, and Tim Fassam, who is the Director of Government Relations and Policy at PIMFA. 

As you may know, Royal London has recently launched some new research which explores why 39 million adults in the UK currently miss out on the benefits of professional financial support. 

Our findings reveal there's a lot more to the advice gap than first meets the eye. Indeed, we've shown the advice gap can be broken down into four distinct populations of customers who each have different needs and face different challenges. By looking at these groups separately, we believe we can start a much deeper conversation around the type of support each segment needs and who would be best placed to provide it. In this session, we’re going to dig into the key findings from our research and discuss how our industry might work together to help more customers get the help they need. 

If you'd like to read our full research findings, you can download a copy from our website at adviser.royallondon.com/fixtheadvicegap. 

The advice gap is undoubtably one of the biggest issues we face as a nation when it comes to helping people get their finances in order. Was there anything in our research that you found particularly interesting or surprising when it comes to how we define and talk about the advice gap or even understanding why so many people fall into it? 

First of all, Jamie: 

Jamie: Thanks, Claire. I think the very interesting thing for me is that we've started to really break this down and understand who is in the advice gap and for what reason, really - and there are different reasons.  As ever, it's much more nuanced. It's easy to talk about the advice gap and assume that that's a fairly homogenous group of people, and of course it isn't – they’re all different ages and personality types and different financial means. It reminds me a bit of actually some of the work that is ongoing regarding the self-employed, where we're trying to get the self-employed saving for retirement, just as we have done with employed people through workplace pensions. 

People talk about five million self-employed as if it's one large group of people in a similar position. Of course, it's not – they’re all in very different types of jobs, at different stages in their careers. This is similar, really, so it really starts to get into the detail of that and help us understand, you know, why people are in the advice gap, if they feel they're in the advice gap, and if so, why? And that starts to, I think, give us an edge and to starting to solve the problem once we understand it better. 

So, I found that particularly interesting. 

Clare: Thanks, Jamie. Next, Ben? 

Ben: Yeah, I mean, the advice gap was one of those terms, you know, as Jamie said, it's a bit of a catch all, but it covers a very broad range of people in different situations. I mean, just looking at the research that you guys have produced, I mean, there is a big cohort in there that think it's too expensive to go out and seek financial advice, and I think some of that is perception, but also, you know, we have seen with increase in regulation and the complexity required and giving advice, that there was kind of minimum levels that advisers need to remain profitable, are starting to go up. So, there could be an argument actually that it’s too expensive for a lot of people to try and get financial advice in the current system. 

But the other thing as well, there are 22% of people haven't even thought about it - they just hadn't even thought about the concept of financial advice. And that's a really broader education piece that we need to try and get through as a society about how important it is to think about finances and getting help with finances as you would put other things in life. So, it is a really difficult one, to kind of cover the advice gap because there are so many people that need advice, but through whatever reason, either they're not engaging with the process or don't feel that they can they can afford that advice process, or potentially they can't afford the process. It’s something really that as a group we need to try and work on to try to find some kind of solution. But it's a difficult one to try and solve, I must admit. 

Clare: Thanks, Ben. And same question to Tim. 

Tim: I agree with everything that's been said. And I think it is really important to recognise that when we say the advice gap, what we're talking about is a whole different selection of unmet needs or potential benefits that people either can't access or don't understand are available to them. And having that extra level of granularity is really useful in terms of solving that, and it's something where and we at PIMFA did a report earlier in the year on improving the advice market. That was one of the things we try to recognise, was that there was a range of options and solutions that would help different people and close this this overall gap. 

I think the other thing that struck me and I think is worth our industry thinking about, that is we talk about investable assets. So, throughout the research in the way people think about it - do I have enough money to get advice? And so we’re now thinking about advice very much as managing wealth that people already have. And actually we need to think about how we can help people build that wealth in the first place, because there will be a whole selection of people that perhaps have reasonable incomes but haven't so far been able to build up very much in the way of assets, and they can potentially benefit from advice just as much. So, I think that getting that balance between level of assets and the potential for assets in the future is really important. 

Clare: Thanks, Tim. 

So, let's go on to think about assets in a little more detail. And the FCA has recently suggested that customers who have assets of around £10,000 would benefit from some form of financial help. However, our research shows that many advice firms would turn a potential client away unless they had closer to £50,000 to invest. In fact, 20% of the firms we spoke to said customers would need as much as £100,000 before their firm would take them on as a client. 

Despite the fact that there are millions of people who fall into this group and are open to receiving professional financial help, many advice firms will feel that it simply isn't economical to support customers who have lower levels of investable assets. So, what can our industry and our regulators be doing to help change that? 

I'll ask you that question first of all Tim. 

Tim: Yeah, and this is one of the really important questions here. And I think there's two elements to it. One is, you know, what can individuals - with lower amounts say - what could be available to them? And the second is, why is it that many firms are requiring that much to invest? So, on the first, I think one of the things we've recognised at PIMFA is actually there is a group of people for whom full professional financial advice isn't the right answer. And we've been very supportive of the Money and Pension Service and government guidance, and we need to do what we can to make sure that guidance is available for people on lower incomes, lower amounts of saving, who need a bit of help and are not going to be able to afford to pay for it. We've then looked at how we can increase access to simplified advice through clarifying the regulations that would enable it to be easier to offer a service with a lower degree of liability. That's something that’s absolutely the best thing for that individual to do. 

On the other side, we've ended up with a scenario where a full professional financial advice is an absolute gold standard, platinum standard, product that is phenomenally valuable because of the level of effort and detail and professionalism that is delivered by, but that is inherently expensive. We have a regulatory burden and a set of regulatory costs, including fees like the FSCS and others, that mean that it is very expensive to provide that full advice, and with a kind of proportional fee, firms need those high level assets to make that work. So in terms of finding a solution, we need to look at both those - how we can provide better guidance, simplified advice - and simplified advice is an area where some PIMFA members are interested in providing something more mass market, potentially driven by technology. And making sure we're not adding unnecessary cost into the advice process. And if you go back to the financial advice market review, one of its conclusions was they were very limited in what government could do because they had to stick to the definition of advice within MIFID. Having left the EU, that's no longer a restriction. So, I think there is a real opportunity for regulators to look again at how they can make sure we can deliver this high quality product without those unnecessary costs and difficulties. 

Clare: Thanks Tim. And same question to you, Ben. 

Ben: I mean, I think that the stats that you suggested, you know, £50,000, or even £100,000 to invest before a firm takes a client on are probably quite accurate and certainly within our network. I would suggest that this points towards a higher end of that before it becomes viable for one of our guys to take somebody on. And something that we're trying to push at the moment is to think about how we can help advisers use technology to make things more efficient. 

I think it is all down to the efficiency of the process. And, you know, technology is getting better all the time. I think that from what we've seen in the robo space, robo isn't widely taken up. And certainly from my conversations with a number of providers in that space, it tends to be that clients hover around, they look at things for a long period of time, but then don't press the final button to actually kind of confirm. And actually, where these guys have a kick out to a telephone service, that's where you get most of the conversion. So, I think people still want to talk to people as part of this process. And I think in the very short term, robo is probably not going to solve this problem on its own. So, I did hear a fantastic term a few days ago of Cobot. So, this is actually a term used in robotics. So, a robot is, you know, something that goes off autonomously and does its business. A Cobot is something that’s designed to work in an environment with humans. So, I do wonder whether the most efficient way of doing this could be, rather than having robo advice, we could have Co-Bo advice - so something which is a hybrid of the two together, a combination of automated and human intervention as well. And we're starting to see a few of those products out there. But it really is going to come down to economies of scale to make sure that we can do this. You know, and as has been said previously, the burden of how much detail you have to go into to provide advice, I think, is a blocker, because, you know, if you think practically giving advice on £100 a month regular contribution into an investment or even £50 a month into an investment, is probably a similar amount of effort to invest in 2-3 hundred thousand pounds in terms of paperwork and time frame. So, we need to find a quicker way of doing that. And it could be that actually we can use technology that's become, almost have like an incubator for advisers, so for newer customers or for younger customers, maybe, they'll come in on some form of more robotics or more guidance based approach and as their savings build, they start to kind of move more into the traditional advice space  - but I think it's going to be all about technology. 

Clare: Brilliant. Thank you. And Jamie, what role can providers play in all of this? 

Jamie: Ben and Tim make some really interesting points, and I would certainly concur with that. It feels like there's a journey we need to take people on to take customers on - because they don't start life needing advice necessarily. Most people don't. And some of the nudges that we can use to get people into the savings habit will work very well as a starter. But there is something about how that need for advice, generally speaking, grows or indeed can be sprung upon someone through different life events as they get older. 

So, there is something about taking people on a journey. Perhaps there is something about planting the seed earlier, that advice is something to think about for the future, rather than just what we've done really as an industry up until this point is we've got literature that just says, if you need advice, speak to financial adviser and that's not really doing anything to get people engaged or interested in that as a concept. We need to have more conversations about how you might not need advice now, but it's something you might want to think about the future. And wouldn't it be a good problem to have that you had significant assets at a later point that you needed advice and you could merit paying more for advice because you could get somebody to help you with that. So, there is something in there, I think - absolutely right - about, you know, data and technology. There's more of that providers can do, and are doing in some cases, to try and help, you know, start the advice process by reusing the data that we hold and building that data and sharing that data. I think just a final point on this, we haven't mentioned it, but I think one of the inherent costs I know for an adviser is the levies and fees that they pay - whether that's PI for, you know, the types of business that they do, which is one thing, or as pretty much all advisers have to pay FSCS levies, which we know are, you know, really an all time high. And a lot of that is driven by other things that other people do within the industry and problems that have occurred through, you know, lack of foresight or lack of good governance. So, we need to work harder, I think, collectively on that to try and make sure that we're not, you know - people aren't paying half their adviser fees for the levies the adviser has to pay. We need to help advisers get those fees down by doing better things and stopping problems before they happen, I think. 

Clare: Thanks, Jaimie. 

So, let's focus on the advice gap in a little bit more detail. As I said earlier, through our latest research, we've been able to break the full breadth of the advice gap down into four distinct customer segments. And we believe if our industry can build solutions to match the needs of each particular group, we have a much better chance of connecting more people with the financial help that they need. So, looking at each of these segments, the customers who fall into the disengaged gap and the guidance gap are generally younger with lower levels of personal wealth and financial knowledge. They are, however, the most likely to feel unprepared to cope with a life shock.

 Tim - what can our industry be doing to help these people plan and feel better prepared for the future? 

Tim: Absolutely, I mean, these are critical individuals and most importantly, this is the future of the industry. I mean, if we don't help these individuals, particularly in the 25 to 35 mark and 35 to 45, you know, we're going to limit our future client base. So, getting this right is critical. And I think there's a few things that can be done that are linked with understanding on how these people build up assets and how they interact with the world around them. And going back to previous points, technology is going to be absolutely critical. These are a generation that are used to doing things on technology, on App and web based and don't necessarily have a huge amount of human interaction or have experienced things that are similar to the advice process before. So, making sure we have ways of engaging that are relevant to this group are critical. I think that is a really important part of recognising what the industry can and can't do and supporting what we can't do. So supporting things like the Money and Pensions Service to provide guidance for individuals that are not able to access the market, but working with those guidance providers to ensure there are appropriate handoffs and ways for them to engage with sales processes so that either when they get to the point of wanting, say an execution only transaction, or getting to the point where they need advice, it's really easy and simple for them to do so. And the two other things I think are important to recognise, which is about how these age groups and these brackets are likely to build up wealth. One is automatic enrolment pensions, this is the key demographic for auto-enrolment. So these people may build up relatively large amounts of money compared to the national average, without engaging at all. So there is going to be a point at which they have significant sums of money and they will want some help and support, perhaps they’ll have multiple pots, and so helping them transition from a disengaged state to an engaged state, and what that might mean in terms of the opportunities is really important.

And the other is intergenerational, because we're now looking at a scenario where if care costs don't eat away at an inheritance, potentially for many people, over 50% of their lifetime income will now come from inheritance due to high parental house prices. And so making sure advisers are looking at intergenerational wealth transfers and how you bring those younger generations into the relationships you have with existing clients will be really critical because some of those that are disengaged or in the guidance gap, may suddenly find themselves inheriting hundreds of thousands of pounds. And you want to make sure you've got a good relationship with them already, if at all possible. 

Clare: Thanks Tim. 

Jamie - the FCA is currently consulting on whether pension providers should implement stronger nudges that would encourage pension savers to make an appointment with Pension Wise. Now, one of their key proposals is to put a cooling off period in place before a customer could access their pension savings if they've chosen to opt out of guidance. Do you think that would help? And if not, what can we be doing to encourage more customers to seek guidance? 

Jamie: So, getting people engaged with guidance is one of our key challenges, and everybody recognises that, and I think everybody agrees that guidance is a good thing. And, you know, even those who use it value it and find it helpful. I don't think there's any question about that. I do think, though, we need to find a balance here. So, the objective isn't just to sort of force people into guidance and then feel that that's a great success if we if we achieve it. I think we need to people need to want guidance. They need to feel that it's something valuable that they want to go and do rather than they're forced to do. And I think there is a balance to find here. You know, we started a few years ago with freedom and choice at retirement, particularly, so giving people access to do what they need to do or want to do with their money. If we then start putting what might be perceived as barriers in the way of that, where people think, well, I know exactly what I want to do, but I'm now being told I need to wait through this cooling off period or I'm being told that I must go and get guidance before I can undertake any sort of decision - that may run the risk that people start to feel that that's prohibitive and even that, you know, they're being told they can't access their money in the way that they were promised back in the days of freedom and choice. So, I think we need to think more carefully. The objective isn't to get people taking guidance, it's to get people interested and to find guidance valuable and therefore it’s something they want to do rather than they feel forced to do. Now, I'm not saying that's easy and I don't have a magic bullet as to how we do that, but I think we need to talk it up a bit more rather than just talk about it factually and try and signpost it and put in place various nudges. I think we need to talk a bit more about why it's such a good thing, especially when it's free of charge and can be delivered entirely independently. So, I think there's more we can do, but I'm not sure that cooling off periods is the right way to go about it. 

Ben: I think if I could just jump in there in a second, I would probably agree - I don't think cooling off periods are probably the way it's going to solve this issue as well. I wonder whether at the root of this is financial education when people are young, that would make the biggest amount of difference. And I know it will take a while to filter through society but, you know, if we can look at the program of education within the school system to make sure that kids understand that it's good to plan ahead, it's good to save you know, think about the future and really invest in that - I think that will probably pay more dividends over the longer term. I mean, we talked about the Money and Pensions Service a couple of times and they put out some stats recently. They said that 22% of the population have less than £100 in savings. I mean, that to me just sounds unbelievable. And it clearly shows that we need to think about that whole culture of savings over time. If through education in schools, potentially through more workplace savings plans, I think workplace savings can form a really important part of that. And things like Save the Change - I know some of the banks – they’re doing Save the Change as part of their Apps. And I wonder whether we can invest the change, because actually if we invest the change, investments will grow over a period of time and just change that mindset of save on a continual basis, will help people get out of that cycle. I mean, Tim talked before about inheritance and people inheriting wealth. And I think that that's certainly an important thing and a lot of the advisers in our network do do intergenerational planning as part of their normal process, but I think a lot of people in the advice gap won’t inherit a huge amount of money. You know, they're from maybe poorer demographics, those that don't have an inbuilt kind of culture of saving or investing within the family. So, I'm not sure that the inheritance thing, again, will solve their financial problems. And I do think we need to go back to that regular encouragement of saving all the time, constantly throughout workplace savings, throughout Save the Change Apps, throughout pension savings. Auto enrolment is great - I think it's if people rely on that solely, it's not enough. And people will get to retirement thinking, well, I've been in a pension my entire life and realise they don't have enough cash. So, again, the education piece around how much to put in there. But I do wonder whether the school system is where we need to start and all this. 

Clare: And I think certainly that most people would agree that financial education is key, just, you know, encouraging that saving for the future and just thinking about it as it’s a bank account for the future, isn’t it? You use your bank account now, what are you going to use in retirement? 

So, we've thought about those first two groups, but now I want to have a think about the customers who fall into the self-sufficient gap. Now, they generally have the most money to invest, but they also feel the most confident when it comes to looking after their finances. Now, this gap has the largest population of older customers who are also the most likely not to trust advisers. So, for those who have a negative impression of the professional advice market, possibly driven by historical scandals, how can we reset their thinking on the professional advice market and see huge value advisers can add? 

Now ask that question to all three guests. But first of all, Ben. 

Ben: I think we're a little in danger of thinking the skeletons of the past defining our future here, and, you know, there has been some scandals, we've all seen them. but on the whole, I think it's important that we try and get that message out that financial advice is a wonderful thing and can add real value to people's well-being, their financial well-being, over a period of time. I mean, Vanguard recently produced some statistics that suggested as a percentage gain of some of these overall investment portfolio as a result of advice. And I think it’s through that education piece, we can really suggest the value of advice that can play to individuals. The problem we're always going to have is that the stories you hear about are the ones that hit the press. And what the press want to do is sell stories, so they'll print the ones which kind of get the most immediate shock, horror responses. And you don't see the stories about all the good things that happened. So maybe what we need to do between providers and advisers themselves is push out more positive stories about actual customer interactions and how they felt the benefit of things. 

I'm sure that there are a huge number of stories out there and some of our advisers certainly would focus more on the cash flow modelling side of things, regularly work on that basis. And, you know, they are such an integral part of their client’s life that the client phones the adviser and says, you know, I want to buy a new car. Is that OK? And the adviser says, hang on a second, looks at the cash flow model and says that’s fine, yes, right off you go and buy your car. So it really is an integral part of their kind of financial position and I think we just need to try and push out those good stories to try and counteract the few kind of bad stories that we have floating around. 

Clare: Thanks, Ben. And now over to Tim. 

Tim: I agree with everything Ben said. I think the other aspect that's really important TO help build trust in our industry is to deal with the, you know, the essentially the out-and-out criminals that are bringing the industry into disrepute. And these aren't mainstream financial advice firms – they’re scammers, and we've been doing a huge amount of work on things like the online safety bill to try and get people like Google, Facebook, the social media search platforms, to take fraudulent adverts to deal with fraud or impersonation frauds, to deal with fake news articles, which end up with people losing an enormous amount of money and that is seen wrongly, completely wrongly, has being part of our industry.

 The other aspect is getting supervision right, particularly after things like LCF and the mini bond scandals, making sure we've been working very carefully with and closely with the Treasury and the FCA to get these high-risk investment products properly regulated and properly restricted. So that, again, we're not ending up in a scenario where people are losing large sums of money because they think they've dealt with a financial adviser or engaged with our industry when in fact they have fallen victim to a fraudster. 

And I think we've got to deal with that to enable people to feel that they can trust the rest of the sector who are, you know as Ben said, incredibly professional now, offering a really high quality product. I think your own research showing that potentially can benefit individuals up to £47,000, far more than most people could earn in a year. So, as well as making sure we're out there building trust and ensuring people understand that benefit - dealing with those fraudsters, dealing with those bad apples, those high risk products is absolutely critical to rebuilding trust. 

Clare: Thanks, Tim. And Jamie, have you got anything else to add? 

Jamie: Yeah, I think some interesting points there. I mean, it's interesting how we've got a society where people are in the main quite willing to pay for good professional but very transactional services through solicitors and estate agents for buying houses, you know, of similar magnitude in terms of the amount of money they might pay. And these you know, they're all doing a great job, but they're not necessarily saving money. And it's almost like that bit is a bit lost when you start talking about financial advisers. They are actually potentially saving you quite substantial sums of money rather than simply costing money. And I think that there are a lot of kind of myths around that as to what financial advisers really do. And, you know, I think Tim’s absolutely right as well that we've got a bunch of bad apples in all of this, you know, there's no denying that there are an awful lot of people who, as technology has enabled them to do, running all sorts of high risk investment scams now, which are not all illegal, but highly inappropriate for many people and it's not helping at all. So, there's something again, I don't think it's good enough just to say, well, look, check the FCA register and so on. I don't think we should just leave it to customers to just sort of do their due diligence. I think we need to educate customers on what to look for and what the what the real warning signs are for things that aren't appropriate. And we do, you know, we are doing that, but it's I think we've got more work to do in that area. 

Clare: Thanks Jamie. 

Now those customers who fall into the professional advice gap represent the biggest immediate opportunity for advisers. Not only are these customers amongst the most affluent, more than half say they're open to receiving professional financial help. And that equates to around 3.9 million customers. 

Ben, with such significant and potentially profitable opportunities out there, what do you think advisers can be doing to reach more of these customers and is there anything the industry can be doing to help? 

Ben: I think that we're probably coming to a place in our industry where we're going to start to see soon a shortage of advisers to actually look at servicing customers. I mean, we are seeing a number of advisers drop year on year. And I think if you look at a number of firms now that they're not really looking to take on new clients, they’re happy with the clients they've currently got. You can argue that that is a little bit short sighted in that, you know, clients will pass on and, you know, wealth will pass down generations, but I think that we do have a big issue to try to sort out as an industry where new talent will come from. And I think we need to really address that sooner rather than later to try and help service the amount of clients are out there wanting advice. And if you combine, you know, more advisers being able to provide advice with technology that will be able to help provide that advice as well in a more efficient way, that's the way we're going to go towards addressing this particular gap in the marketplace. You know, if people are open for advice, maybe they just need a nudge towards it. But if they are willing to engage, then we do need to have people there who can actually provide that advice, the advisers there to do so and the technology to back them up and help them do that. 

Clare: OK, thank you. 

Now moving on to think about barriers to advice. Our research has also shown that regardless of which advice gap customers fall into, there are six key barriers which stop people from seeking professional financial help. And most of these barriers are mainly driven by widespread customer confusion around what advisers do and the value they can add. 

What steps do we need to take in order to change that? I'd like to ask that question to everyone, starting with Tim. 

Tim:  This is what's really critical to get right at this point. So, I think we need to ensure that we've got that clarity about particularly the advice guidance boundary, what each service does, so people can be really clear about what it is they're going to go to get. That we can be really clear about the value that people get and can get and that people recognise the risks that they're trying to manage if they're looking after their own money. And this is going to mean a few things. One is just making sure we are communicating as an industry really clearly what our purpose is, what value we can add. I think it's in our interest to really encourage people to use the guidance of the Money and Pensions Service and the Government guidance that’s available because that will get them used to engaging in that process, get used to asking for help. And I know that's one of the recommendations of your report. And then I think it's really critical we make these handover points as smooth as possible and as easy as possible - so moving from guidance to advice, moving from your auto-enrolled pension where you've disengaged to engaging in at the point of retirement, that we make these really smooth. And one thing we haven't talked about that will be helpful, I think, in time is the pensions dashboard, which will make it as easy as possible for people to understand what they've got and then be able to help them understand what they could have with the right advice and guidance. And I think working with the government, and with the regulator to make sure that this is encouraged - one of the recommendations PIMFA made on the recent consultation on the structure of the regulator, was to move from an objective from the FCA on consumer protection, where they tend to interpret a customer who’s done nothing is being protected. And to one way, they have to promote good consumer outcomes. And we would see one of the good consumer outcomes we would like the regulator to work with us on is access to advice and guidance. And I think if we're all pulling in the same direction, that would really help. 

Clare: Brilliant. And same question to Jamie. 

Jamie: Yeah, I would agree with much of that. I think I mentioned before that it feels like we need to take people on a journey, one which starts with information that education at an early age  - as I think Ben and Tim both mentioned - but takes you through to guidance as you start to save, along with nudges to help you save and start building up some kind of assets and indeed protecting your finances along the way. And then leads to a position of advice, not as a cliff edge where, you know, it's kind of free all the way up to a point and then suddenly it's very expensive, but more, you know, how can we manage that transition where people start to feel, actually, I do need to start thinking about how I pay for this because I can save more now I’ve more significant assets and I have more complex affairs, you know, but we want them to sort of gently get into that mindset rather than suddenly feel that they're faced with a big bill for advice, and I think that I think that will really help. 

So, taking people on a journey is to me is probably the biggest thing. It's a bit tricky, though, that, you know, we can't go back and take everybody on a journey who's already reached a point later in life where for some reason they don't trust advice, so there's also a number of educational things I think we need to do around myth busting around what advisers - good advisers - actually do and how they help people. 

Clare: Thanks Jamie. And Ben, do you have anything to add? 

Ben: I think I can agree, I agree with all the comments so far, I think there is that kind of educational front, but we can't forget about the population who are already kind of way past school age and into later life now, and that's a separate education piece, which, you know, organisations like the Money and Pensions Service are doing a great job to try and help, help educate or help provide education out there to people. I mean, one for me, one of the key things from your topics was I don't like to talk about money. And I think as a society, that's one of the things which is really historic, in British society anyway, people don't talk about money. It's one of those things that's a bit taboo to have a conversation around. And trying to break that taboo could well be an important step in getting people to engage with the process, because, you know, talking to a financial adviser is really, your revealing a lot of information, you have laid it all out on the table and having a real kind of detailed chat about money, whereas it can be perceived as that’s just not the right thing to do, which is kind of not cricket in English society. And you know that we have seen some push forward with that. There was Talk Money campaign from Money and Pensions, which I think has gone somewhere in there. But again, education piece to say it's OK to talk about money. You know, don't hold up, don’t bottle it up inside, seek guidance, whether it is from someone like a Government body, whether it's through a financial adviser. But it is OK to talk about it. 

Clare: Great, thanks very much, Ben. 

Within the research, Royal London have outlined some key areas of focus, which it believes will help to solve some of the problems that we've spoken about today. These include doing more to promote the free guidance services, improving the financial education at grassroots level, which we've spoken about, and helping advisers to scale up their services. Would you agree with these particular areas? And is there anything else that we've perhaps not covered that you think our industry could be doing to help more customers enjoy better financial outcomes and experiences? And that question is to everyone. But starting with Ben.

 Ben: We've probably covered quite a bit of this already. I think free guidance is really important, we've talked about education at a grassroots level and I think it's all around just making sure people understand what's out there, what's available and how important it is to engage with the process and whether engaged with the process is, you know, receiving traditional financial advice, whether it's some kind of robo process or whether it is a Save the Change App as part of your banking. You know, I just think it is really important that we keep the message out there. We keep flying the flag that talking about money, talking about finances and thinking about how you can influence your financial future is something we should really just promote to all at all times. 

Clare: Thanks, Ben. Jamie? 

Jamie: Yeah, I think there's something about I mean, I agree with Ben entirely. I think there's something about normalising the discussion about guidance and advice in a way that I was thinking with some of the earlier comments that were made about how we think about other things, you know, people perhaps with advisers, they don't want to speak about their money and there's a stigma or a taboo around that. But equally, you've got other things in life, you know, you do speak to your doctor about your health or your dentist, about your teeth or, you know, there's other things which are generally accepted. But there isn't this kind of acceptance that you should go and speak to an adviser about your money or at least speak to somebody, and get some guidance about your money. And, you know, perhaps it would help break down some of these taboos, if you like. We're not asking people to go out and tell all the friends about their money problems necessarily, but we are asking that they speak to somebody, who can, who is independent and who can help them. And I think there is something about almost normalising that as a service that people utilise in their lives. And it does play to all these points about early education and, you know, improving access to free guidance and indeed helping advisers to scale up and therefore, you know, make it more accessible for people in later life to get advice. So, a number of things, but yeah, some good points made. 

Clare: Thanks, Jamie, and it's interesting that actually talking to friends about doing things like going to see a financial adviser might be helpful. You don't have to talk about the money aspect, but sometimes it's just that normalising that that's something that you would do, isn't it? We talk about other things with our friends. 

And lastly, Tim? 

Tim: I mean, we would, at PIMFA, completely agree with all of the recommendations in your report and, you know, very, very supportive of these promoting the guidance services, scaling up, and particularly, I think, the industry embracing technology. You know, the cobot idea that Ben was talking about, we've talked about - it's possibly a little bit more melodramatically cyborg advice, how you use technology to make yourself more efficient as a financial adviser to reduce cost, increase scale, you know, absolutely right, we've got to demystify and improve financial education with both of those. As Jamie said, it's really normalise asking for help. There’s been some fantastic campaigns on mental health, for example, around normalising, asking for help, ensuring that there's no shame or worry, given the connection quite often between money worries and mental health concerns, really critical that we normalise asking for financial guidance and financial advice. And then one for bodies like PIMFA just to make sure we're really working with the regulators very closely to ensure that we've got the right definition of advice, the right balance between a regulatory system that ensures a really high quality product in advice, without unnecessary cost, difficulty or unintended consequences. And we'll keep doing that. 

Clare: Thanks, Tim.

Now finally, the overriding message within the research is that the industry must work together if we’re ever to fix the advice gap. How would you summarise the key risks if we don't make it easier for customers to access the financial help they need whenever they need it? First of all, Jamie. 

Jamie: Well, I think you only need to look at the problems we face today already where, you know, it was mentioned earlier that the millions of people who don't have £100 in the bank. People who weren't the lucky baby boomers with DB plans, who didn't benefit from auto enrolment all those years and who are approaching retirement with very little in terms of pensions. There are some very significant problems financially and in society and in terms of financial resilience already. We've seen that exacerbated, of course, over the last 12 months through the tragedy of the pandemic, if you like, which has hurt so many people and so many ways financially and emotionally. 

So, I think you only need to look at that and say, well, if we allow that to continue and people don't get guidance and don't get advice, and we ally that with an ageing society, increasing number of people out of work and into retirement, if they're poorly prepared financially, then it's bad for those people and their families, but it's also very bad for the economy, and it's not a good way to balance the economy if we have huge numbers of people who need the state's help because we haven't got them thinking and preparing financially through guidance and advice. So, the problems are quite dramatic, they’re quite profound I think if we don't fix this, we need to work quite hard at it and if we're going to make it better. 

Clare: Thanks, Jamie. Same question for Tim. 

Tim: I'd agree with Jamie. I mean, if people aren't prepared for the future, the costs will inevitably fall on the government, and even if the support isn't there right now, people will sort of vote for enhanced support and change things going forward. But it will also, you know, it's important, one of the things we talk about a lot with the FSCS is where, you know, that actually that has a lot of cost for adviser firms from the levy, but it's more important to remember that every customer that's fallen onto the FSCS has had a personal tragedy and actually if these individuals can’t prepare for the future, are suffering in retirement, that is a huge personal tragedy. And actually the benefits of financial advice, and I think we talked about this a lot in the last podcast I was involved with, are not just about people's financial wellbeing, it's about their personal wellbeing, their mental health, and that's a real personal tragedy, on top of all of that, the sort of government regulatory industry issues, that people are missing out on those benefits. 

Clare: Thanks, Tim. And finally, Ben. 

Ben: Yeah, so I think the comments around financial resilience are probably really important in this one. I mean, we have, I think, an inbuilt urge as human beings to, you know, want jam today and not put it off until tomorrow. And there is a very real danger that without proper education and without working with an adviser or through a guidance programme that, you know, we go around our lives happily, you know, buying the things we want, having the holidays, going out for meals, and then, you know, when you do get to a point where you're thinking ‘I should actually wind down now’ you’re just not in a prepared position or indeed if, you know, some kind of tragedy hits beforehand, you know, the pandemic has obviously shown the effect it can have on people's earnings and wages. Something like that happens - people aren't prepared, you know, it can have a devastating effect on their life. And, you know, as I was saying, that mental health as well, and we've talked, I think, a lot on this podcast around kind of investing and saving, but there's also the idea around protecting as well. And, you know, protection is one of those products which is generally sold rather than bought. And if we don't engage with people to outline the value of protection, it could be that when disaster strikes in their own personal life that, you know, things are a lot worse than they could have been. So, for me, there is that huge danger of just sleepwalking through life to a point which is not great for them individually or as our whole society, as more government support is required.

 Clare: Thanks Ben. 

And that brings us to the end of today's podcast. And I just like to thank my guests for their time today. And once again, if you're interested in reading more about this research, please visit our website at adviser.royallondon.com/fixtheadvicegap.

"If we’re going to dispel some of these myths, we have work to do in making sure the profession is better understood. For those of us who work in the industry, the benefits for people taking advice are very clear. But for those who don’t, much of it remains something of a mystery."

Jamie Jenkins
Director of Policy and External Affairs

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