“And I think these days we’re thinking about it in a slightly different way. There are different ways of serving different types of customers, and there are different services that are suitable for different types of customers.”
Altus Consulting investments director Ben Hammond says: “People talk a lot about the advice gap and what RDR has ‘caused’. Whatever you believe, there is an obvious gap in customer understanding and financial literacy, so there’s a definite opportunity for suppliers.
“But a lot of it — especially with consumer duty coming up for example, but everything around ‘treating customers fairly’ has been around for years — is about serving those customers and actually providing them a solution.
“I think there’s a definite commercial opportunity, because there’s a bunch of people there who are either saving just in cash, and that’s not always the right thing to do, but they haven’t got enough in the way of income or savings to warrant paying for a bit more advice.”
2020 | 2022 | |
Proportion of adults with at least £10,000 investable assets, holding most/all in cash | 55% (8.4mn) | 58% (9.7mn) |
Source: FCA Consumer Investments Strategy – 1 year update | ||
Hammond adds: “I think there’s quite a lot of firms thinking, ‘there’s a definite opportunity, we need something to serve — [it] could be existing customers, because a big insurance company like Aviva has got millions of customers just buying life insurance, car insurance’.
“Ultimately, it’s about serving the customer and trying to help them invest for the longer term, for the future, for their retirement, and everything else.”
A growing customer base
Also highlighting the number of customers is Holly Mackay, chief executive of Boring Money, a financial education website and research provider.
“Customer numbers are higher than they’ve been ever before. DIY investors rose exponentially throughout the pandemic, and then again in 2021,” she says.
“Growth slowed a little last year, but there’s more than 10mn DIY investor accounts now. There are more investors in the UK who are self-directed than we’ve ever had before, so it’s a growing audience.”
Besides the number of DIY investors, Mackay cites regulatory initiatives against the advice gap. “If you listen to the mood music coming from the regulator, there’s thinking going on about guidance, hybrid advice, digital advice, simplified advice,” she says.
“We size the advice gap at just over 13mn people. So that’s people saying, ‘I would invest or I do invest, but I’m not confident, I’d like some help with that’.”
So with more providers seemingly competing in the D2C investment space, should the advice industry be keeping an eye on this adjacent market?
