By Lee Robertson, CEO of Octo Members Group

I firmly believe good financial planning can be life changing. The advice gap is well recognised and when presented visually it is incredibly stark.

Visual Capitalist is good at that kind of visual presentation. It is a website full of great information put across in a highly visual way with impressive infographics.

Only 3 per cent of the public took advice in 2018, meaning rather obviously that 97 per cent did not, and only 6 per cent had ever sought advice from a professional adviser.

A chart from BlackRock caught my eye. I have long been a follower of their UK Investor Pulse report – the asset manager’s annual survey – and the findings are always worth mulling over as a financial planner or as a believer in the value of financial planning advice. According to the 2018 report as visually displayed by Visual Capitalist, the following is true in relation to the UK adult population accessing financial advice: only 3 per cent of the public took advice in 2018, meaning rather obviously that 97 per cent did not, and only 6 per cent had ever sought advice from a professional adviser.

BlackRock says in 2018 there were 26,700 UK advisers, and working with an optimum number of 100 clients each means, of the 53.5 million UK adults, only just over 2.5 million have access to an adviser. It also cites evidence from a UK trade publication, which states another 15,000 advisers are due to retire by 2029. Unless things change quickly, the advice gap looks certain to widen despite all the great work being done to bring young people in to the financial planning profession.

However, I remain optimistic. The cited number of 100 clients as an optimum number per adviser may soon be consigned to the past. Similarly, the requirement to see clients in person so regularly may also become far less important. I’m sure the FCA and providers are already working on making digital signatures the norm. We have seen great examples of this through this period. As is so often the case, necessity is driving innovation and this is particularly true right now.

We are having to rapidly adapt to the current situation and the adoption of modern technology is demonstrating daily that we can achieve a large part of what we used to do in person by utilising video conferencing, client portals and secure document exchange. The longer this situation goes on, the more comfortable and adept we will become working this way.

If we eliminate lots of the less productive time around client meetings, advisers could increase the optimum number of clients way past 100. I believe it well worth exploring in any case. Anything that can be done to bring the value of financial planning to more people will always get my attention.

 

 

This is an edited version of an article which first appeared in Money Marketing on 29 April 2020.