In an ideal world, everyone would have access to the guidance they need to make smart decisions with their money. But the truth is, millions of people in the UK are falling through the cracks, a problem known as the financial advice gap.
So what is it, exactly?
The advice gap refers to the growing number of people who could really benefit from financial advice but either cannot access it, think it is too expensive, or simply don’t know where to start. And it is a bigger issue than most people realise.
Recent research from The Lang Cat shows that only 9% of UK adults paid for financial advice in the last two years – down from 11% the year before.
At the same time, over 12 million people with more than £10,000 in savings or investments still aren’t getting any advice at all, according to Boring Money’s 2024 report.
That is a huge number of people navigating complex financial decisions like saving for retirement, buying a home, or investing without support.
Many end up keeping their money in cash for years, where it slowly loses value to inflation.
Others feel completely overwhelmed by the sheer number of investment platforms and products, unsure where to begin.
Even for those who want to learn more, the world of investing can seem impenetrable, filled with jargon and complexity that makes it hard to know who to trust or what information to follow.
On top of that, money remains a taboo topic for many.
People often feel uncomfortable talking about finances with friends or family, which leaves them isolated and stuck sometimes doing nothing at all, simply because they do not know what the right next step is.
Many still believe that financial advice is only for the wealthy, or that it is simply too expensive to be worth it
This is exactly where access to one-to-one guidance from a professional can make all the difference, offering not just advice, but clarity, confidence, and a plan.
So what is stopping them?
A big part of it comes down to cost and perception. Many still believe that financial advice is only for the wealthy, or that it is simply too expensive to be worth it.
And in fairness, traditional advice models have not always been accessible especially for those who do not already have large sums invested.
Regulation has also played a part.
As rules tighten to protect consumers, some advisers are stepping away from clients with smaller portfolios because the compliance workload has become too heavy. It is well-meaning, but it leaves a lot of people without anywhere to turn.
And then there is awareness – or the lack of it.
The Lang Cat found that 72% of people did not even know about free government-backed guidance services. So even when help is available, people are not always finding it.
Services like Pension Wise and MoneyHelper offer free, impartial guidance on pensions, money, and debt. They’re backed by the government and designed to help people navigate complex financial decisions, but they’re still underused.
What can we do about it?
The good news is that there are real efforts underway to close the gap.
Regulators are exploring new ways for people to get more tailored help without needing full-blown regulated advice.
This includes encouraging the development of “guidance-plus” models and other forms of personalised support that stop short of formal financial advice, but still provide more relevant and actionable information based on an individual’s circumstances.
One part of this is financial coaching which provides 1:1 personalised guidance to help navigate the overwhelm that can often come with navigating your personal finances.
Simplified advice models are being developed that could serve more people in a cost-effective way
These initiatives aim to bridge the advice gap by enabling providers to offer more meaningful assistance without triggering the full regulatory requirements associated with personalised advice.
At the same time, innovative, simplified advice models are being developed that could serve more people in a cost-effective way.
These models typically use digital platforms, streamlined processes, and limited-scope advice to deliver targeted recommendations.
For example, focusing on a single financial need like retirement planning or investing a lump sum.
By reducing complexity and cost, these solutions make regulated advice more accessible to people who might not otherwise seek or afford it.
Lisa Meller is an independent financial adviser at Personal Finance Movement Ltd
