Article by Phil
According to Retirement Review Independent Financial Advisers were the most trusted when it comes to financial advice.
The survey found that:
- 88% of people trusted their Independent Financial Adviser.
- Whilst 70% said that they trusted their family members to provide them with advice.
- 68% trusted financial advisers generally.
- But only 43% of people said that they trusted the government when it comes to financial advice.
- According to the FCA only 8.6% of the population paid for financial advice last year.
Having said that the Trafalgar House Trust found that trust in the pensions industry had fallen last year. It seems that people don’t really have any strong opinions about pensions which is worrying. Only 4% gave the maximum trust rating whilst 7% said they didn’t trust pensions at all.
Not enough people getting independent financial advice.
The FCA estimates that 16 million people in the UK could have benefitted from Independent Financial Advisers support but didn’t. These were people who had over £10,000 to invest. The main reasons for not getting advice according to the Financial Lives survey included:
- Making their own decisions – 29%
- Don’t trust advisors and don’t rate their advice – 18%.
- Never thought about getting advice – 16%
- Independent Financial Advisers Fees were too high – 14%.
- Found all the help needed for free online – 12%.
- Didn’t know who to turn to – 9%.
- Someone helped me – 5%
From this it’s clear that advisers need to more to communicate their availability and the quality and importance of their services. Important for many reasons. Not least to consider tax efficiency.
According to figures from the FCA over 300 people cashed in their pensions worth over £250,000 last year, creating a minimum £100,000 tax bill. This is unlikely to have been best advice for them. A further 1,500 people cashed in between £100,000 and £250,000 after taking their tax-free cash creating a minimum £30,000 personal tax bill.
The FCA are concerned about this type of behaviour from people acting without advice.
Those who do pay for advice have been making the most of it over the last few months. According to EY European Wealth, 60% of clients have seen more of their Independent Financial Advisers in the last year. Whilst only 35% of clients said they saw enough of their advisor.
Lack of Trust in Wills
The number of Wills being challenged was more than 10,000 last year. A record high.
It’s probably down to a combination of reasons including more fractured families and the rise in online Wills which are often not fit for purpose. Another big reason is that over 22 million people say that they are relying on an inheritance to prevent them going into debt.
According to research by level Group, this reliance on inheritance means that almost 40% of people say that they would challenge a Will if they didn’t think they were getting what they were entitled to.
Normally a Will can’t be overturned but there are some circumstances which can give rise to a challenge. These might include:
- Allegations of fraud
- Lack of capacity to make the Will in the first place.
- Errors in the detail of the Will and its execution.
- Financial challenges from spouses, former spouses and children who haven’t been reasonably included in the Will.
Any of these require a Grant of Probate being delayed until the challenge is dealt with, usually through the court.
These are the problems encountered when a Will is actually in place in the first place. 40% of people don’t have a Will in place at all.
Too many people taking risks with investment advice
According to research by Broker Chooser, over 25% of millennials said that would take a chance with online investment opportunities. 15% said that they would follow the “advice” of a fin influencer. But importantly most said that they would test the opportunity with a small amount first. This makes younger people feel more confident that they would be able to spot a scam.
Over 50’s are less confident. AI is starting to play a bigger role in the scam arena as it is able to produce fake website and communications more easily.
This comes on the back of news that over £1,7 billion was lost to fraudulent activity last year. With over 3 million cases reported. £140 million of that money involved investment scams. Up over a third since 2021.
As we always say please be careful. Especially with online investment opportunities where over 50% of scams originate. The other things to be careful of are telephone-based approaches.
Dubai has recently taken the lead on online scams by requiring fin influencers on social media to be registered and licensed by their regulator. This seems like a good idea and one we should follow in the UK.
