An estimated 12.4m adults in the UK with assets of £700bn have fallen into the advice gap in 2024, a slight increase from last year.
They include both existing DIY investors (9.2m) and cash savers (3.2m) with more than £10,000 in cash.
The data is from Boring Money’s 2024 Advice Report that shows the advice gap continues to widen as more people choose DIY investing.
Boring Money said there were 10.4m DIY investment accounts in the first quarter of 2024 and DIY assets hit fresh highs of £420bn.
The advice gap usually refers to the people who want financial advice but can’t afford to pay for it.
The Boring Money report shows that 21% of investors, about 9% of UK adults, have received financial advice.
Over four in 10 investors aged 55-64, and 16% of UK adults in this age group, get financial advice that starts to fall after age 65.
It also shows a small fall in the number of people willing to pay for advice – 44% of investors with more than £10k would be willing to pay for help with at least one financial priority in the next three years.
Looking ahead to the Boundary Review, 44% of non-advised investors would prefer a cheaper People Like Me service and 46% would prefer to pay more for a recommendation specific to their needs and situation.
Boring Money said that reported confidence among investors has fallen marginally, thus increasing the need for support and help.
It said the Advice Guidance Boundary Review, which has proposed various measures to help tackle the advice gap, could change the financial situations of millions of consumers.
Boring Money said it tested the appetite for both targeted support and simplified advice.
The report noted that targeted support has the potential to lift 5.3 million adults, with collective assets of over £250bn, out of the advice gap.
Holly Mackay, chief executive of Boring Money, said: “Targeted Support could really move the dial. There is a clear need and appetite for lower-cost, lower-touch ‘People Like Me’ solutions, although consumer suspicion about conflicts of interest will be a vital thing to tackle head-on.
“Interestingly we found clear interest among those with higher assets, as well as those with smaller accounts. I think this will present new business opportunities for many and could also be an escape route for wealth managers, struggling to manage the demands of ongoing servicing and deliver value for money for those accounts in the £100,000 region.”
Last December, the FCA launched a consultation on plans to relax the advice-guidance boundary.
It proposed simplified advice, targeted support and clarification on when firms can give guidance to consumers without straying into advice.
The Boring Money research found that not all in the advice gap need new propositions to lift them out of it.
It said 1.3m consumers in the advice gap, the pipeline for tomorrow’s traditional financial advisers, want personalised advice, have high incomes and are happy to pay the fee for this advice at such time as they perceive the need.
Satisfaction with advice
The report found that 91% of ongoing advice users report satisfaction but 23% are fairly satisfied and cite negative experiences.
The most common reported reason for dissatisfaction is receiving poor advice, then the performance of investments and those who think they could get the same outcomes without advice.
And 24% of dissatisfied customers did not believe that their financial adviser was acting in their best interests.
Meanwhile, 13% complain of paying an ongoing fee but not getting an annual review, and 13% complain that their adviser did not proactively contact them.
Switching advisers
About 30% of customers say they have switched at some point and this falls to 22% if you exclude those whose adviser retired.
After retirement of their adviser, the most common reason for 15% of customers is dissatisfaction with investment returns.
And 11% reported switching due to a lack of proactive contact, and 10% because of the lack of an annual review.
AI and sources of advice
The report found that 3% of consumers say they would use AI to get financial advice, a fall from 7% when ChatGPT became mainstream.
In comparison, 44% say they would see a financial adviser, 39% would ask family and friends, and 34% a comparison website.
About 21% of investors or cash savers with more than £10,000 say they would be happy to take investment recommendations from AI tools, while 24% say they would be happy to pay for advice from an individual who used AI to offer a cheaper or better service – a fall from 29% in 2023.
The highest levels of acceptance are among those non-advised with assets of more than £250k; 40% say they would use AI tools to generate investment recommendations.
