Most UK adults don’t seek regulated financial advice, believing it to be “too expensive” and “for the wealthy”

  • New research from FSCS adds further fuel to the well-documented financial ‘advice gap’ concept[1] and supports moves to broaden access to advice and guidance.
  • Over half (55%) of those surveyed believed that paying for financial advice is for the wealthy, and 58% agreed that it should be easy to invest without needing professional financial advice.
  • There is a greater need to understand the differences between the types of advice and guidance available, so consumers can feel confident about making responsible decisions with their money.

Today, new research from the Financial Services Compensation Scheme (FSCS) reveals that almost two-thirds (64%) of UK adults with savings, investments or a mortgage have not sought regulated financial advice in the last five years. More than one in five of those who obtained free guidance rather than regulated advice said they did so because they believed the service was “too expensive”.[2] More than half (55%) of those with any financial products think that “paying for financial advice is for the wealthy”.

Young people between the ages of 18 and 34 were most likely to agree that it should be easy to invest without needing professional financial advice. More than half of UK millennials (60%) and Gen-Z (57%) with financial products agree they can find good financial advice online, and almost half (44%) of Gen-Z believe they can source good financial advice on social media.[3]

With investments, pensions and cryptocurrency scams on the rise, as fraudsters seek to take advantage of the cost-of-living crisis, FSCS’s new research suggests there is a greater need for consumers to understand the difference between regulated advice and guidance, and what to expect from each. This will help consumers feel more confident about getting help and making responsible decisions about their money. 

Not seeking regulated advice, or following guidance from unregulated and unsuitable sources, could put UK adults at higher risk of putting their money somewhere that isn’t safe. This is a pertinent issue for FSCS as consumers may only be eligible for compensation for poor financial advice if they are dealing with a firm that is authorised by the FCA.

Yet, encouragingly, the new findings also show that among those UK adults that have taken paid for regulated financial advice, 62% said that if they needed financial advice for a similar reason, they would use the same service from the provider they used before.

Additional findings from the study include:

  • Across the various regions in the UK, adults with savings, investments or a mortgage living in Greater London had been the most likely to seek financial advice in the last five years – with 49% of them saying they did so. This was followed by South England (38%), Scotland (36%), North England (34%), and Wales (33%). Adults living in the Midlands were the least likely to seek financial advice (31%).
  • When asked if there were any circumstances in which they would pay for regulated advice the most common answer, among those UK adults with savings, investments, or a mortgage, was after receiving a lump sum of money (e.g., inheritance, bonus, insurance payout).

Caroline Rainbird, Chief Executive of FSCS, said: “The financial ‘advice gap’ is a concern for FSCS, particularly as scammers will prey on peoples’ fears and exploit any gaps in their financial knowledge, putting them at greater risk of making poor decisions about their money.

“Our latest research shows that consumers are looking for easy ways to invest, whilst also getting the right support. The FCA’s Consumer Investments Strategy looks to make advice on mainstream investments more accessible and affordable to everyone, which is something we welcome.”

“At FSCS we see the impact of poor advice every day. It results in millions of pounds each year disappearing from consumers’ pockets. We can only offer protection on financial products and services that are regulated, and we encourage consumers to check if they are likely to have access to FSCS protection if something goes wrong.

“It is important for people to be fully aware and confident about the decisions they are making with their money and the risks that come with taking guidance from unauthorised sources.”

“To learn more about how FSCS can protect regulated financial advice, you can listen to our Podcast episode.”

For more information on financial advice, visit MoneyHelper’s website: Financial advisers | MoneyHelper. For information on FSCS protection, visit our website https://www.fscs.org.uk/.

Media enquiries

Email publicrelations@fscs.org.uk or fscspressoffice@hanovercomms.com

Notes to editors

The research

Unless specified, all findings referenced in the release came from research conducted by Ipsos UK. Ipsos conducted the survey on behalf of FSCS, interviewing a representative quota sample of 2,000 UK adults aged between 18-75 using its online FastFacts platform. Survey data were weighted to the known profile of this audience. The research was conducted between the 10 and 13 August 2022.

Of the 2,000 UK adults aged 18-75:

  • 1901 have financial products
  • 1660 adults currently have savings or investments or a mortgage
  • 678 adults currently have savings or investments or a mortgage and have taken financial advice
  • 203 adults currently have savings or investments or a mortgage, have taken financial advice and have used paid for regulated advice
  • 128 adults currently have savings or investments or a mortgage, have taken financial advice but did not use a regulated FA

FSCS publishes its consumer research on its website. You can find the full report and sign up for future releases at www.fscs.org.uk/industry-resources/research/

 

About FSCS

FSCS is the UK's financial compensation scheme that protects customers of authorised financial services firms if they fail or have stopped trading. FSCS protects:

  • Banks, building societies and credit unions
  • Investments
  • Pensions
  • PPI
  • Debt management
  • Endowments
  • Mortgage advice
  • Insurance
  • Funeral plans

FSCS is independent and can pay compensation if an authorised firm fails and is unable to pay back money it owes its customers. FSCS’s service is completely free to use and is funded by a levy on firms authorised by the PRA/FCA.

[1] UK Financial Advice Gap Report | OpenMoney UK (open-money.co.uk)

[2] Among those UK adults who obtained guidance but didn’t consult a regulated financial adviser, the three most common reason for not doing so were: they didn’t think their savings and investments were large enough (23%), had already enough information to make their decision (23%) or found it too expensive (22%).

[3] 44% UK adults who have any financial product strongly agree/tend to agree that you can find good financial advice online – with 60% UK millennials and 57% Gen Z who have financial product strongly agreeing/tend to agree to this; almost half (44%) of Gen Z who have financial products strongly agree/tend to agree they can find good financial advice on social media.