| Mind the financial advice gap
It's all about advice this week, or rather a lack of it, with news of two new reports that could be seen as either positive or negative, depending on the old glass half-full, glass half-empty thing…
New research by OpenMoney reveals that, in the past two years, just 10 per cent of Brits have taken paid for financial advice, which obviously suggests that advisers are missing out on huge numbers of potential clients, but also suggests there must also be a massive opportunity to increase business.
The main sticking point for the vast majority who opt not to seek professional financial advice, is all to do with perception, according to OpenMoney, with paid for advice described by many as 'expensive' and advisers 'untrustworthy'. Commission is also a top concern, despite legislation having long since consigned it to the wealth management wastebasket, which suggests a basic lack of understanding of how the sector is structured and operates.
And when it comes to assessing how to win the hearts and minds of the un-advised, cost and confidence are the keywords, says the report.
Adding insult to injury somewhat, new research from Quilter says that even if they were in receipt of an unexpected GBP500,000 windfall, only one-in four UK adults would choose to speak to a financial adviser.
Ian Browne, retirement planning expert at Quilter, says: “These figures make for worrying reading. It is a warning flare to the advice market that we all need to do a much better job of articulating what a financial adviser is for, how they can help and the value they can offer."
On a somewhat more positive note, a new survey by workplace savings specialist Cushon suggests that over three quarters of UK adults say the Covid-19 pandemic has highlighted the importance of having something stashed away for a rainy day. While seventy three per cent of the 3,000 respondents believe that having a pension and saving for the future is essential, easily accessible savings are also equally as important.
New figures from the Investment Association meanwhile, reveal that UK savers have regained their appetite for retail funds following March's highest ever monthly outflows. Chris Cummings, Chief Executive of the Investment Association, says: “Sales rebounded strongly from April through to June to reach GBP11.2 billion for the quarter, eclipsing 2019’s annual total of GBP9.8 billion."
The new game though is bonds – Asian bonds – (try it Sean Connery-style) rather than funds, according to 7IM, whose Head of Portfolio Management Haig Bathgate says are a much safer investment than their 'generous returns' suggest. Bathgate goes so far as to suggest that Asian corporate debt is actually a safer bet at present than many other countries, including the US.
"China is a large component of the [Asian] index," says Bathgate. "China has handled the global pandemic very well and should recover more quickly, making its companies less likely to default. By contrast, we do worry about the US high yield sector, since many of its companies might be vulnerable if Covid-19 continues rampaging through the south and west.”
I wonder if my financial adviser agrees…
Wealth Adviser
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