I get all nostalgic when I hear the phrase “Mind the Gap”. I remember this was one of the first phrases I heard when I visited London with school for the first time when I was around 10.
I was lucky enough to have visited London again this week as a panellist at The Verve Group’s Evolution event, where I was asked to share my thoughts during a panel discussion on another type of Gap – The Advice Gap. For the record, I was petrified! However, upon reflection I think the subject is such an important one, and therefore for those not lucky enough to be in the room on Tuesday I summarise my thoughts below.
I believe knowledge and in turn education is one of the biggest gaps the industry is facing currently. For me there are millions of people in the UK that just don’t understand why advice is important and why they might need it. People do not trust what they do not understand. Lack of trust and understanding therefore lends itself to a lack of confidence, which in turn means people are not exploring the options available to them or asking the right questions to the professionals, for fear of getting it wrong or looking naïve.
Coming from a working class background I am really passionate about ensuring financial understanding is accessible to everyone but alongside accessibility it has to be simple! In my experience the financial services industry thrives on making things complex.
Now there are some great initiatives out there. This year I have volunteered with Redstart, a charity who provide financial education to children under the age of 11. I am also aware of other great podcasts and learning materials being published to capture a multigenerational audience. However, unless people believe that they need to read this educational material and need an understanding of it, then all of this hard work goes to waste as we still have a disengaged audience. Our population need to understand that they have options about what they want their financial landscape to look like in the coming years, and then decide what they want to do.
Many of us if asked what our financial obligations were in the next 5-10 years, wouldn’t know, and that is the point! It is the support, empathy and re-assurance from someone/something that is needed, as well as the desire and want before the education can begin. People need to be prompted with the right questions and support in order to see the value that advice can give them. It is only then that they understand their need for financial advice, and at this point education can be given and accepted.
Often it is thought that technology is the answer. However as we have seen through multiple client engagements, millions are spent of deploying simple and interactive digital advice solutions. But even when these solutions are offered to friends and family at a zero charge price point, not many take the opportunity or time to go through the journey, again re-enforcing that awareness point.
Awareness then leads onto simplicity – Financial Services is always perceived to be complex. I for one believe this is true and I am not just talking about the products. Advisers and product providers can try and make this as simple as they can, but honestly this is a losing battle. For many years our Government implemented and installed both a complex regulatory and tax system that has meant that the ability to make financial services simple is practically impossible.
Look at pension freedoms – that was a so-called ‘simple’ approach approved by the government. And without the right education and planning this has meant a disaster for many. In order to really close the advice gap something fundamentally needs to change at a UK Government level, which provides advisers and product providers the opportunity to support the masses.
The other reason this has to be driven by the Government is, like it or not Financial Services are seen to be out there just to make as much money as they can from people. Here the trust factor comes into play again, as people do not trust that advisers or product providers want to help them but are only doing it for a quick buck.
The point to all this is unfortunately I do not believe we can turn around and educate a whole population right now. The government need to act now and ensure there is the implementation of financial education in schools, as part of the maths or PSHE curriculum. This could be the beginning of a roots up solution, but unfortunately it would take 20+ years to bear fruit. In respect of right now, the first step has to be awareness and consideration, with this awareness and education being timed just right. Too soon and people won’t be engaged, too late and suddenly people will be scared and shy away.
Advisers and Product Providers are trying their best but as an Industry we need to do more! So what can we do – we need to start by breaking the Taboo surrounding financial advice. Talk to family, talk to friends, anyone that will listen. Seeking advice or guidance should be normal and talking about this will help. Additionally, if you can make Introductions, please do, people trust a recommendation more than anything else.
