One in five people who have previously not received financial advice plan to do so in the future to prepare for retirement, according to new research.
Nick Elphick, managing director for specialist products at AXA Wealth, the firm behind the study, claimed that it represents an opportunity for independent financial advisers (IFAs) to demonstrate their worth.
“Now is the time to ensure as much as possible is done to promote the benefits of professional financial advice and long-term saving more widely”, he said.
In January, new rules from the now defunct Financial Services Authority (FSA) were introduced to change the way financial advisory firms operate and generate income. The retail distribution review (RDR) aimed to raise professional standards in the industry by forcing advisers to charge set fees, rather than take commission.
Elphick said, “One of the key drivers behind the RDR was to establish financial advice as a profession akin to solicitors or doctors and as a credible financial support network.
“With one in six consumers already having sought professional advice in the past and planning to do so again in the future it would suggest they have reaped the benefits of professional financial planning.”
However Julian Parrott, partner at ethical investment advisory firm Ethical Futures, said that the projected increase in investors seeking advice may mean that some get poorer service.
Speaking to Blue & Green Tomorrow, he said, “In the short-term, with fewer bank assurers and many IFAs focusing on high net-worth clients, I suspect that they will find adverse effects of RDR in that there will be less rather than more advice.
“I think that the financial services industry will need to review how it advises clients. I suspect there will be some growth in web-based advice, but I think that many people still want to speak to someone for clarity about what they should be doing.”
He added, “I think that we in the advice community need to think long and hard about how we provide advice to clients of all ages. There is a lot of concentration on empty nesters and the retired at present.”
A recent study suggested that younger investors are more concerned with making sustainable and responsible investment decisions than those in the older generations. Meanwhile another study said teenagers who grew up during the recession are now more environmentally and socially aware.
With a proportion of the new financial advice customers likely to be made up of these younger, more ethically aware investors, Parrott said he hoped that this will lead to a growth in ethical investment.
However, he said, “I still think that the current problem is that real ethical investment choices and advice need to be sought out and clients often need to work hard to access it.
“Traditional IFAs, tied advisers and ban assurers have been very bad at making ethical investment available to the general public in anything but a token way. I suspect that the web will be the way to resolve that.”