If you had asked my granny about financial advisers and what they do she would have likely described what we’ve come to term ‘the man from the Pru’; a man walking door-to-door serving a critical role in our communities by making sure people saved something for a rainy day, often before it was flitted away down the pub.
Times have changed. Today many ordinary people are unable to access the kind of basic financial planning that today’s retirees enjoyed during their working lives.
This is arguably at a time when they need it most as the UK’s household savings ratio is in long-term decline. According to the ONS, households saved more than ten per cent of their income in all but one year of the 1980s. In 2017 the savings ratio hit a record low of 3.2%, rising only fractionally since.
This widespread and repeated neglect of our household finances has major ramifications, not only for the individuals affected by subsequent hardship, but also upon our economic prosperity as a nation. A lack of ‘rainy day’ saving and basic insurance cover are major concerns, which hamper economic activity and restrict our ability to cope with short term financial uncertainty.
More often than not people simply don’t know who to trust to help them. Earlier this year, Edelman’s annual trust barometer recorded record low levels of trust in government, business, charities and lawmakers. We have entered an epidemic of mistrust that is shaping our spending, voting habits and who we choose to believe.
But in reality financial advice has come a long way in the last ten years, introducing more rigorous qualifications and tighter regulatory requirements, particularly when it comes to the end of commission and the move to client fees. Nevertheless, in recent weeks the media has placed a spotlight on some outdated practices that continue to permeate corners of the sector.
It is all too easy to point to poor practice at other firms and accuse them of giving the industry a bad name. Trust is built and maintained by setting a high bar of professional standards across all advice and excluding those who fail to meet that level. To change perceptions, the sector needs to be seen as a profession in every sense.
As we enter Financial Planning Week – an initiative led by the Chartered Institute for Securities and Investments to encourage more people to seek financial advice – financial advisers will be offering free sessions for consumers in an effort to highlight the life-changing value of having a financial plan.
I strongly hope that people take advantage of these free sessions so they can see firsthand the value advice has to offer.
This article first appeared in Professional Adviser on 8 October 2019