Boring Money Advice Report 2021: ‘A sting in the tail’

Substituting face to face advice with video calls is likely to become a long-term trend beyond the pandemic, Boring Money’s 2021 Advice Report finds.

Compared to pre-pandemic figures, the number of investors happy to receive advice via video doubled, up from just 25% in 2019 to 49% by April this year.

The figures indicate significant growth in appetite for video as a substitute for in-person advice, presenting an opportunity for financial advisers to reduce overheads and travel time.

However, it could also carry a ‘sting in the tail’ Boring Money CEO Holly Mackay warns, with some gravitating toward digital advice services that blend automated processes and advice over video.

The data shows investors are divided over the merits of face to face or digital advice. Among investors, 40% said they would favour paying a lower fee for digital advice, and 29% said they’d prefer face-to-face advice, even if it cost more, while the rest remained undecided.

Boring Money’s market segmentation indicates that most investors that are interested in digital advice are currently non-advised. However, of the estimated 3.6 million advised investors in the UK today, approximately a quarter are receptive to the idea of getting advice digitally.

Boring Money CEO, Holly Mackay, says:

“Traditional advice has weathered the storm relatively favourably over the last 12 months. For an industry dependent on client relationships and face to face contact, advice has fared remarkably well in spite of social distancing and remote meetings. In fact, video meetings may also provide an opportunity to reduce costs and potentially engage client’s children and grandchildren that no longer live locally.

“But there could be a sting in the tail. We can see a growing acceptance of remote advice delivered digitally, and continued pressure on charges, with a strong interest in fixed-fee models. These factors combine to put pressure on traditional advice from several angles.

“Younger savers and investors are most likely to feel comfortable with remote advice, and with recommendations coming via a computer. As the demographic picture shifts it will drive growth for digital advice models.”

Boring Money’s annual review of the advice market combines quantitative data from nationally representative consumer surveys, as well as in-depth qualitative panels with both advised and DIY investors.

The 2021 report considers the long-term impact of the enforced switch to video meetings during the pandemic; advised client satisfaction over the course of the last 12 months; and the future threats and opportunities for the sector.

Other key findings include:

  • Advised client satisfaction rates remain at pre-pandemic levels:

Despite the limitations on face to face client meetings, financial advisers continue to register strong customer satisfaction levels during the pandemic. Among advised clients, 90% reported being satisfied with the service received over the last year since the beginning of the pandemic. Most respondents stated they either strongly agreed (53%) or agreed (37%) that they were satisfied with the service their adviser had provided.

 

 

  • Fixed fees:

Asked about their preferences for fee models, 43% of respondents said they favoured paying a fixed-fee for one-off financial advice. Just 17% said they would prefer ongoing advice, charged as a percentage of their assets.

  • Digital advice:

Among investors, 40% said they would favour paying a lower fee for digital advice, and 29% said they’d prefer face-to-face advice, even if it cost more. However, appetite for digital is most prevalent among younger people, while those aged over 55 still tend to favour face to face, even if the cost is greater.

  • Low confidence investors:

Of the 12.1 million non-advised investors identified by Boring Money’s segmentation of the market, 9.2 million report they lack confidence and could benefit from help making financial decisions. Around a third of those non-confident DIY investors have more than £50,000 to invest. To service this group of unconfident investors with £50,000+ to invest, the traditional face to face advice sector would need to roughly double today’s capacity.

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