Stop. Listen. What can you hear? That’s the sound of thousands of real people telling us what they really think about all that we do.
The FCA’s Financial Lives survey has been running since 2017. Since then, it has listened to the views of more than 60,000 real people, sharing their experiences of our world – the good and the bad. Thank you to the FCA for providing this insight.
So, rather than using my column to share what I think, I’ve given my column inches to the 17,950 people who shared their views in the latest survey, and to all those who have shared before. Taking inspiration from US chat show host Larry King: “Nothing I say this day will teach me anything. So, if I am going to learn, I must do it by listening.”
It has been a rollercoaster ride since the FCA began listening in 2017. Real people, like us, have lived through Brexit, Covid, war in Europe and a cost-of-living crisis. Like us, they have witnessed three general elections, five prime ministers, seven chancellors and seven pensions ministers. How many can you name?
Today, 24% of people say they have low financial resilience – one in four people you might pass on the street today
Given all that has happened, the first thing real people have shared is their remarkable ability to cope. Today, 24% of people say they have low financial resilience. By this, they mean they are struggling to pay bills, feel heavily burdened by their existing commitments, or have very limited savings to cope with the unexpected. That’s a worrying 13 million adults – one in four people you might pass on the street today.
What I admire is that this population has only increased by 1% since 2017. This struggling group needs our help, but despite everything, three in four are keeping their financial heads above water. And let’s remember that half of the adult population have experienced vulnerability in the past year, such as poor health or a negative life event. Respect.
As the industry called upon to help people manage their money, our headline feedback is “could do better”. Yes, those who have confidence in us outnumber those who do not – 39% to 28%, with the remaining 33% unsure – but confidence remains a minority view, and it hasn’t improved since 2017. Encouragingly, more people now believe us to be honest and transparent. But before we get too self-congratulatory, this too is a minority view – up from 31% in 2017 to only 36% today.
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Fewer than one in ten (8.6%) accessed regulated financial advice in the past year. Positively, that’s 1.4 million more people than in 2017. But at this rate of progress, financial advice will remain the preserve of the fortunate few for another hundred years. In recent years, there has been a remarkable change in how advice is delivered – with use of Zoom increasing 14-fold since before the pandemic. But despite this innovation, the advice gap looks set to remain wide for some time yet.
From my pension patch, I take heart from the insight that the number of people with no private provision has nearly halved since 2017 – from 30% to 17%. Auto-enrolment has clearly done much of the heavy lifting. And fewer than 5% have chosen to stop saving in the past year, despite all the turbulence.
But positive participation must not be confused with understanding and engagement. A third (31%) of non-retirees have not really thought about how they would manage financially in retirement. And half (50%) of those aged 45 and over have little or no idea how much income their defined contribution pension might provide.
A majority of those who have drawn from their pension in the past four years said they were happy with their decision
Ten years on from the introduction of pension freedoms, public understanding remains weak. Only about one in five (22%) of those aged 45+ felt they had a good understanding of their options at retirement. For those aged 55, the figure was fewer than one in three (29%).
Yet despite this, a majority (60%) of those who have drawn from their pension in the past four years said they were happy with their decision. Many in this group may have had the security of a final salary pension. But as final salary schemes continue to decline, let us hope that this satisfaction does not decline with them.
The volume of insight shared by the FCA is vast and detailed – and it has committed to publishing even more this autumn. Listening to the views of those we serve has never been easier. It is a population that is trying its best, but crying out for more.
Many of the building blocks are in place: the FCA’s own Advice Guidance Boundary Review, the government’s guided retirement ambitions, the arrival of pensions dashboards and the underpinning of the Consumer Duty are all positive developments. But there is still much more for us to do.
Alistair McQueen is head of savings & retirement at Aviva
