It’s an intriguing idea, and not really rocket science, but I suspect most Financial Planners will be unwilling to countenance this, even though it might bring a queue of new clients.
6m Britons would pay for cheaper financial advice
So what would the millions pay? It’s not clear from the report but we’re probably talking about hundreds of pounds a year, not the thousands most Financial Planning advice costs.
This will not be music to the ears of most Financial Planners who will say providing holistic Financial Planning advice for a few hundred pounds is not commercially viable. And who can blame them?
So where next?
What the survey - by online financial advice firm OpenMoney and YouGov - confirms is that cost remains a major barrier to consumers seeking financial advice but if that barrier can be lowered millions more might seek financial advice.
The real question is how to bridge the advice gap and reach these millions. Initiatives are thin on the ground.
Much as I respect and admire the Financial Planning profession, holistic Financial Planning is probably not the answer.
Financial Planning is the Savile Row of the financial advice market. Most people shop in Primark.
Financial Planners are making a very good living delivering good quality advice, in the main, to clients who appreciate it and there’s nothing wrong with that at all. It makes perfect commercial sense. Ultimately it’s not realistic to expect a relatively small profession like Financial Planning to meet the huge demand this survey implies.
New initiatives are needed if the cost of advice, and barriers to usage, are to be lowered and these may include the government, professional bodies, entrepreneurs, online services and others. Perhaps working together.
As I mentioned last week, robo advice on its own is probably not the answer. A hybrid or robo and online / telephone advice? Possibly and some are trying this. Other initiatives are being tried too.
Several entrepreneurial Financial Planners are also quietly trying new online ventures and it’s good to see those but they will require huge investment to truly open up financial advice to the masses.
Some people are talking about a subscription-based model. Perhaps £20 to £100 a month could be a more attractive option than paying several thousands of pounds upfront, particularly for the Netflix generation, but they will want something tangible for this. A half yearly report on all their finances could be one valuable offering. To do this cost effectively providers must make online access to valuation reports much easier than it is now.
The Pensions Dashboard too could open up new advice opportunities. It would be relatively easy for a pension saver with dashboard access to contact a financial adviser for some topical advice on understanding what it shows although this also opens up risks too. Used wisely, however, it could be a real boon to the lower cost advice sector.
Advice when you need it could be one way forward.
It’s good that millions want financial advice and the survey suggests people are not as ignorant of the benefits of financial advice as some would have it. But it will take government support and some creative commercial initiatives to move things forward.
Dismantling the cost barrier will take time.
Kevin O’Donnell is editor of Financial Planning Today and a financial journalist with over 30 years of experience.