UK consumers and investors continue to use and value the independent financial advice (IFA) sector for financial help and guidance, a survey has found.
IFAs were ranked as one of the most popular sources when people were searching for information, according to research from Unbiased.co.uk. Almost one in five survey participants said they had sought advice from an IFA in the last five years.
The figure increased to almost a quarter among those aged over 60, reflecting the growing need for advice as consumers draw towards state pension age.
Julian Parrott, partner at Ethical Futures, said, “I think that the financial environment has led to the trend. There is a range of factors including the financial crisis, mis-selling and [the retail distribution review], as well as increased complexity of financial choices.
“For us with an ethical slant, I think it does also lead to a concern about the ‘ethicality’ of financial products and services and this in itself leads to a growing interest in the ethical and responsible investment field.”
Just 24% of those questioned by Unbiased.co.uk said they were confident self-investing their pension without any professional advice. This increased only slightly, to 27%, for both annuity purchases and inheritance tax planning.
Even for residential mortgages – the area in which consumers were most confident – half of the public would want professional guidance.
Parrott continued, “A lot of people still feel daunted by financial products and terms and just want to hand it over to someone else to ‘sort out’.
“I am increasingly finding that I get consulted for a second or expert opinion in decisions or that clients buy into a full planning service rather than just arranging a product. Financial decisions are just more complex.”
The complexity of financial products is coming from a variety of factors, he said, from mortgages becoming more difficult to come by and assess to cash deposit rates being very low. This, as a result drives people to look for better returns.
Parrott added that this complexity extended to pensions: “Clients have more of them and they get a new one every time they change job, even the old public sector plans (which were pretty straightforward) now confuse clients at retirement because they now offer them increased tax free cash (in excess of original scheme rules).”