A new report from financial consultancy the lang cat uncovers a persistent Advice Gap in the UK, with only 9% of people currently receiving professional financial advice. The study attributes this gap to overlapping concerns—31% of respondents cited a lack of trust in the industry, while 33% admitted they don’t fully understand how financial advice could improve their circumstances.
The research draws on YouGov polling of over 2,000 British adults and additional input from 210 financial advisers. It arrives as the Financial Conduct Authority (FCA) explores ways to expand access to help through its Advice Guidance Boundary Review (AGBR), which proposes “targeted support” for investing and retirement decisions.
Yet public enthusiasm for such initiatives remains limited. Just 13% say they would follow suggestions from investment providers, and even for pension guidance, only 17% would find it useful. Around 25% of consumers say trust must come first before acting on any financial guidance.
Advisers are also sceptical about the proposals for targeted support with one in four disagreeing that they’ll have a positive impact and may even confuse consumers and make their situations worse. Despite this, half of advice firms said they are likely to offer these services once the regulation has been laid out.
Also, under consideration as part of the AGBR, the study shows that there is some interest from consumers in simplified or pay as you go advice models. Around two thirds (57%) of respondents reported being either fairly or very interested in advice for one off type events such as arranging a will or mortgage, rather than ongoing advice with a regular yearly fee.
Consumer Duty and the accidental advice gap
Looking at the impact of the now two-year-old Consumer Duty on advisers’ businesses, two thirds said regulation is making it harder to serve less wealthy clients. Half report stopping services with ‘accidental advice gap’ clients making up an average of 11% of their customer base and rising to 17% for smaller firms.
Turning to solutions, advisers clearly see opportunities through technology for supporting clients with simple needs. When asked about the potential to offer advice services through digital channels, over 55% said these would expand their customer base with 30% able to service less wealthy clients.
This year’s report also features three case study firms whose work stood out for doing their bit to address the advice gap. These include Jo Wall, Founder of Joyful Wealth, Susan Pringle, Managing Director, Henderson Loggie, and Nick Arbin, Director and Embrace Financial Consulting Ltd.
Commenting on the findings, Mike Barrett, Consulting Director at the lang cat says,
“Just 9% of the population has benefitted from paid for advice over the past two years and as an industry, we all aspire for that figure to grow. Despite the headline, there is lot to be positive about. The fact that an overwhelming 91% of those who took advice found it helpful, shows levels of customer satisfaction that any other profession would dream of.
“Two areas of concern remain – firstly the alarming lack of awareness among the majority of the population as to the benefits of financial advice. And secondly, how the profession is increasingly focused on a narrow segment of the population – wealthy individuals over 50 who are edging towards retirement. This isn’t a criticism of the advice profession – the need to service this group is entirely logical and sensible. However, the advice gap is most pressing for those who fall outside of this segment, and we believe there is value in understanding the scale of the problem. Only then can we figure out what interventions if any are needed so that we can start to tackle the advice gap once and for all.”
Additional/third party quotes
Jamie Jenkins, director of policy at Royal London:
“While this report may illustrate how few people take advice today, there are green shoots as we see the value people place on advice when they access it. It’s hard to imagine a future that doesn’t involve an increased need for financial advice, and the inexorable rise of technology in the form of AI presents new opportunities to deliver advice in different ways. The insight from this report may well be the cornerstone of policymaking around the advice gap in the years to come.”
Bethan Lloyd, advice proposition manager at Quilter:
“The findings show that, despite the industry’s best efforts, we still have a considerable way to go in bridging the advice gap. While the concept of targeted support has real potential, more work is needed to demonstrate its value to consumers and build the trust required to make it effective. Crucially, we must ensure that any regulatory change designed to expand access does not inadvertently undermine the importance of holistic financial advice for those who would benefit.
“As Consumer Duty continues to reshape the market, we must strive for solutions that simplify – not complicate – consumer journeys. Journeys that recognise people value the insight of others when making complex decisions and that reflect the broad spectrum of financial needs in society. Now is the time for the industry and regulators to come together to build a tiered, sustainable framework of support. This isn’t just about those with complex wealth, but about the millions navigating everyday financial decisions who deserve accessible, meaningful help.
“Encouragingly, the findings suggest that digital models which ‘incubate’ clients with simpler needs – while preserving the potential for adviser-led relationships to evolve over time – are already of interest to two-thirds of firms surveyed, and even more so among the smallest and largest providers.”
Rob Hudson, Managing Director, Digital Wealth, at the retirement specialist Just Group:
“We know from our conversations with advice firms that the ‘accidental advice gap’ is a growing trend. As the report highlights, customers who previously paid for advice are now reporting their adviser has ended the relationship. And the problem is most acute with lower value clients seeking time hungry, complex help and advice around retirement. Yet help and advice given at this stage is both vital and requires significant expertise. We offer an alternative way to help and serve these customers, enabling advice firms to ‘offboard’ them in a safe and helpful way.”
Mark Rendle, AJ Bell advised platforms product director:
“The Lang Cat’s invaluable research outlines the key factors fuelling the advice gap, namely regulatory and other changes driving up costs and technology and product solutions failing to keep pace with the changing landscape. Advisers know this, with a majority seeing value in digital channels which would allow them to serve clients with simpler needs more efficiently.
“Providers have a huge part to play. AJ Bell has this week launched Touch, a mobile app-based platform allowing advisers and their clients to connect at the touch of a button, with secure, streamlined key document and task approval. We believe this should go some way to addressing the advice gap and allow advisers to service a wider range of clients.”