The financial services sector has been urged to ramp up financial education to the public to win back the trust of consumers.
This comes on the back of the latest consumer report by financial services consultancy firm Lang Cat that highlighted a lack of trust as the biggest issue for the advice sector.
Almost two-fifths (38%) of non-advised clients surveyed for the Advice Gap 2023 report cited trust as a barrier to seeking financial advice.
Industry players are urging the sector to do more to address this issue. Speaking at a panel yesterday (11 May) in London to discuss the report, they called for more concerted efforts from providers, financial advisers, and the regulators.
“I think we all have a role to play to improve consumer confidence as it says in the report it comes down to education. Many of us are trying to do something in that space but we really need to focus on at what point that education needs to come because it is a continuous conversation to improve trust, it’s not a one-hit wonder,” said Sally Plant, head of financial planning at the Chartered Institute for Securities & Investment.
“I have got three children all in school and I know if someone went in and spoke to them just once about improving financial literacy, it might not have that same impact. So again, it’s that repeated message to improve confidence.”
Plant also questioned whether financial education is being targeted at the right demographics who would benefit the most from it.
“Trade bodies trying to improve financial literacy within schools, but the question is when does that literacy benchmark information need to come. Is it at school level or is it perhaps at the more sort of age 30 level so people understand what planning is, what good advice is and how do they access it.”
Sarah Layden, interim MD – direct wealth, Aviva, echoed similar sentiments.
Layden said financial literacy will help consumers build confidence and trust in the financial services sector.
“As people become more financially confident, they’re more likely to take action, more likely to speak to advisers. I think it is at that level we need to focus. And that is on the large providers in essence to get that message out there. And obviously also working with the regulator to help us better communicate more freely with the customers,” she added.
Ross Liston, chief executive, M&G Wealth Advice, said the report highlighted the need for the sector to work together. He stressed the need for financial education as well as making advice accessible to people in a way that best suits their circumstances.
“We going to bring trust and confidence to our customers. We going to better explain what the services are and how it is multifaceted now. The world is no longer I see an adviser and I see them every time.”
He also said the advice sector needs to demonstrate that it is “modern, diverse and inclusive”.
Amanda Mayes, operations director, Magus Wealth, and the only financial adviser in the panel, said it was disappointing that despite the improvements made by the sector since the Retail Distribution Review a decade ago this perception of the sector still lingers on.
“It is frustrating thinking that it feels nothing has changed since RDR when loads have changed,” Mayes said.
“Why do people get a low opinion of financial advisers? Because of what they have read in the press. There are not enough good news stories about the sector.
“If we do one thing is to make it easy for people to know how to get advice. Surely, that’s going to be a centralised campaign and maybe supported by the regulator and all the trade bodies. People coming together to promote the profession like we have been talking for years.”
