The number of UK savers turning to financial advisers following the introduction of new pension freedoms has increased by 66% since April.
As part of our ongoing ‘Tackling the Savings Gap’ campaign, we surveyed over 2,000 people across the UK and found that nearly 70% of savers who seek financial advice, now use a financial adviser to do so.
Following the introduction of the Retail Distribution Review and prior to the introduction of the new pension freedoms on April 6th, just 42% would have gone to a financial adviser if they were looking for financial advice.
More than a third (36%) of respondents said they would turn to their bank or building society for financial advice, yet this is not always a viable option given the number of bank advisers authorised to offer investment adviser has fallen by a fifth since 2010.
Just 8% rely on the Money Advice Service, which was set up by the government in 2011 and funded by a statutory levy on the financial services industry to provide free and impartial money advice for consumers throughout the UK.
We believe that the recent in demand for quality advice is welcome news and could mark a turning point towards closing the advice gap.
However, despite the surge in demand for their services, many advisers remain unwilling or unable to advise, wary of future mis-selling claims. In poll of our own advisers, over 60% didn’t think that the new pension rules are working as they were intended to.
Nearly half of advisers reported that fewer than 10% of those enquiring about pension freedoms have successfully accessed their money since the new rules came into effect.
Commenting on the research findings, our Managing Partner, David Harrison, said: “The financial advice industry has been overhauled in recent years, leading some clients to believe that they could no longer afford advice. Meanwhile many financial advisers have opted to focus on clients with larger portfolios at the same time as the number of bank advisers has fallen. The result is an advice gap.
“The introduction of the new pension freedoms has energised consumers and we are seeing high demand for advice. However, instead of a great liberation of pension funds across the country, the new reforms have left savers frustrated by industry bottlenecks, inertia and an industry refusal to play by the new rules.
“Savers are told they must seek professional advice before switching to a new provider. But many financial advisers are still wary of the new risks and future liabilities they could face in recommending a switch.”
This month, the government announced that there will be a review into the financial advice market to introduce greater accessibility, with recommendations due before the Budget in 2016.
David Harrison added: “The Financial Advice Market Review is a welcome step and I hope the outcome is more accessible advice that leverages technology and provides clearer guidance for advisers.”