Eight per cent of all UK adults have received financial advice – up from six per cent in 2017 – but more engagement is needed to help people to navigate the financial services market, a new Financial Conduct Authority (FCA) report has found.
In an evaluation of the impact of the Retail Distribution Review (RDR) and the Financial Advice Market Review (FAMR), the FCA noted that 4.1 million people are currently receiving financial advice – up from 3.1 million in 2017. A further 12.5 million are getting financial guidance, while 35.8 million are receiving no financial support whatsoever.
Read more: Engaging with IFAs
Among the 8.4 million people who have more than £10,000 of investible assets, 37 per cent did not have any investments at all and were holding their assets entirely in cash, while a further 18 per cent were holding more than three quarters of their investible assets in cash.
“The regulatory shake up of advice under RDR and FAMR originally came about with the aim of protecting consumers,” said Nathan Long, interim head of policy at Hargreaves Lansdown.
“Despite its successes we’ve still got around 36 million people getting by without help with their finances, so improving access to assistance and their financial resilience is imperative.
“The way forward is through a combination of making advice more accessible, but more importantly through innovation in the delivery of information to people to help them acquire knowledge as they go.”
In a sign of the normalisation of fintech solutions, the FCA estimated that assets under automated advice services increased from £0.4bn in 2016 to £3.2bn in 2019.
The regulator said that while more consumers are getting the financial support they need, further innovation could help even more consumers make better use of their finances.
“We want consumers to have access to high-quality advice and guidance at the right time in their lives, to give them the confidence to make better investment decisions,” said Sheldon Mills, interim executive director of strategy and competition at the FCA.
“Our evaluation has found the advice and guidance market is moving in the right direction, but still has further to go. We will play our role to support the market to improve further, in the interest of more consumers. We will use the evidence base this evaluation has given us, along with the responses to our call for input on consumer investments, to shape our work to improve the market.”
The FCA’s call for input on consumer investments closes on 15 December.