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Barriers to financial advice

Journalist: Jane Matthews, FTAdviser

ended 10. November 2022

Hi all, 

Research from Bluestone Mortgages released today showed that despite almost a quarter of the survey's 2,000 respondents being worried about their mortgage repayments, many did not know where to go to for financial advice and support.

I'm interested to hear from the financial advice and planning community about two things in relation to this:

  1. How are your clients faring in the current climate - are you having difficult conversations with them about spending etc? Have you seen an uptick in serious financial difficulty in the last year?
  2. Have you been doing any probono work in response to the cost of living crisis or are you involved in any charity work to support people who cannot afford to pay for financial advice? 

I've summarised some of the main results from the Bluestone survey below:

The findings reveal that one in six people (16%) would be too embarrassed to seek financial support should they need it. Three in 10 (31%) say they don’t think they would be eligible to receive support and over a fifth (22%) say they wouldn’t even know where to begin, while 11% would be worried about the impact on their credit score. 

Looking forward to hearing your responses,

Jane

4 responses from the Newspage community

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Graham Wells
Founder and Financial Coach at GroWiser Financial Coaching
I absolutely agree that many, perhaps most, people don't know where to go for financial advice and support. The regulated financial advice sector serves only around 8% of the UK population and whilst some support is available from organisations like Citizens Advice, the vast majority are left floundering. There are various reasons for such a low level of engagement, often described as the 'advice gap'. It's caused by various factors, such as high costs of advice, mistrust of the industry, apathy and fear. This has always been the case, but maybe the cost of living crisis is highlighting the problem as more people begin to feel anxious and struggle to balance the household finances. The Bluestone survey appears to focus on people seeking support due to financial difficulty, but this is not the area of expertise for most financial advisers. The highly technical role of financial advice provides long-term investment and protection solutions for those who are, generally, somewhere between 'financially stable' and 'wealthy'. Historically, financial education in schools and the workplace has been negligble and we all have money beliefs that can be self-limiting at best, and destructive at worst. As a financial coach, I often speak with clients about their relationship and behaviours around money. Words I hear often are "guilt", "embarrassment", "anxiety" and "shame". What's inspiring, though, is that with the right support, those words change to "pride", "confidence", "excitement" and "optimism" - even in the depths of a cost of living crisis. For the majority of people, who might not yet feel ready for financial advice, financial coaching offers a more accessible alternative. It can help empower people to take control of their money without the fear of being 'sold' a financial product. For those in accute financial difficulty, free guidance can be sought from government sources like MoneyHelper, www.gov.uk/cost-of-living website and various charities.
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Lena Patel
Founder at ISJ Independent Financial Planning
A good financial plan will have been stress-tested to take into consideration market and economic volatility over the longer term. Clients in drawdown have definitely been nervous, as this has been the first time since pensions freedom was introduced that we have seen a market dip of this level. For me the increase in conversations have been from single people and single parent families where the energy crisis, coupled with economic uncertainty, is having an impact on their ability to maintain their lifestyle. I've been involved in doing talks in various single parent groups giving generic guidance on how to ride this storm, helping and supporting people who need the guidance the most.
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Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
Our customers are finding the current economic climate tough, but they are resilient at the moment. I expect more people to get into difficulty towards the spring, when they have had high energy bills for the winter and after more and more people come off fixed rates onto much higher options. We have been helping clients navigate the various government schemes aimed at helping. Feedback from our clients is that they don’t know what they are entitled to and how it’s paid. The cost of living payments were delayed for some clients and this has caused more confusion, and getting to speak to someone at HMRC or DWP is near impossible.
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Sam Tate
Director at New World Financial Group
We help build financial plans for our clients that have leeway for inflation spikes and portfolio underperformance. Over the course of a lifetime these things are inevitable so have to be built into long term planning. Anecdotally, I think a lot of people are concerned about what the next 12 months may bring, and are looking to reduce the number of monthly bills that have may have built up over the past few years. New World have produced a free financial health check to help people analyse their financial position and to take steps towards improving it. The heath check is available online for free here https://newworld-fhc.vercel.app/ with version 2 set to be rolled out in the coming week.