UK Consumers and Financial Advice Market Report 2023
£ 2,195 (Excl.Tax)
Description
Stay ahead of the curve and future-proof your business with Mintel’s UK Consumers and Financial Advice Market Report 2023. Our full report is packed with consumer-led market intelligence, the latest UK financial advice market research, trends and consumer behaviours affecting your business.
Below, we’ve handpicked the key insights analysed in the full report and summarised the core topics.
Key Topics Discussed in this Report
- The impact of the rising cost of living on the UK financial advice market.
- How the UK financial advice market is evolving and adapting to new technological innovation, within an evolving regulatory framework.
- How and why people seek financial advice.
- Consumer willingness to pay for advice, and to what extent.
- Interest in digital advisers and advice platforms.
UK Financial Advice Market Outlook
High inflation, rising interest rates and volatile equity and bond markets increase the need for planning and advice, although affordability constraints will dampen demand. More people show interest in using free guidance and low-cost digital advice. The housing market downturn reduces demand for protection and mortgage advice related to home purchases.
- UK financial advice market opportunity: 19% of UK consumers would like to receive personal financial advice.
UK Financial Advice Market Challenges and Opportunities
Affordability constraints
The main threat to the advice market is a failure to address both real and perceived affordability constraints. Most adults in the UK are unwilling to pay the level of fees that are typically charged by financial advisers. This reflects a tendency by consumers to undervalue the services of a professional adviser.
- UK financial advice market challenge: 59% of consumers are more likely to use a digital financial adviser if the initial advice is free.
Technological revolution
The technological revolution that is starting to re-energise and re-shape the UK financial advice market has the potential to change attitudes and close the advice gap. With more and more free guidance services and low-cost digital solutions emerging, access to financial advice and planning is becoming more widely available
- UK financial advice market opportunity: 60% of consumers agree that accessing advice online or remotely is convenient.
To learn how to connect with your audience, purchase our full UK Consumers and Financial Advice Market Report 2023. Discover lucrative innovation opportunities to help your business grow during times of financial uncertainty.
Additional Features Included with Your Purchase
- Interactive Databook: Each Databook is provided as an interactive website where you can deep dive into our consumer research data on your chosen topic so you can draw your own conclusions.
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Expert Insights from a Finance Analyst
This report, written by Sarah Hitchcock, a leading finance analyst, delivers in-depth commentary and analysis to highlight trends in the UK financial advice market and add expert context to the numbers.
The digitisation of advice creates opportunities for advisers to find new markets and cater for a wider audience. However, there needs to be a concerted and collective industry effort to define the many different types of digital solution that now exist, in order to improve clarity for, and understanding by, consumers.”
Sarah Hitchcock
Associate Consultant – Financial Services
Table of Contents
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Overview
- Key issues covered in this Report
- Report coverage and definitions
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Executive Summary
- The five-year outlook for the financial advice market
- Figure 1: Outlook for the UK financial advice market, 2023-27
- The market
- There are around 11,200 intermediary firms operating in the UK …
- … generating combined revenues of £26 billion in 2021
- Advisers face a difficult year ahead
- Figure 2: Number of regulated retail intermediary firms and total industry revenues, 2017-21
- Number of insurance intermediaries continues to contract
- Figure 3: Number of regulated retail intermediaries, by category of firm, 2019-21
- Firms have only a few months left to prepare for the new Consumer Duty
- Companies and brands
- Most advice firms are small enterprises
- Banks continue to account for a declining proportion of retail investment advisers
- Digital innovation continues apace
- The consumer
- Most people have sought advice about investments, pensions and mortgages
- Figure 4: Proportion of UK adults who have sought professional financial advice on product/area within the past two years or longer ago, 2022
- A good online presence and personal endorsements help attract new clients
- Figure 5: Method of sourcing adviser, by age, 2022
- Saving and budgeting are people’s top financial priorities
- Figure 6: Financial priorities for the next 12 months, 2022
- Just over half of all adults have set themselves a financial goal
- Figure 7: Financial objectives for the next 12 months, by housing tenure, 2022
- Many more people want financial advice than are currently catered for by the industry
- Figure 8: Proportion of adults who would like to receive personalised advice, 2022
- Most are prepared to pay for advice …
- Figure 9: Willingness to pay for personalised financial advice, 2022
- … but few would consider paying more than £500, let alone over £1,000
- Figure 10: Amount willing to pay for personalised financial advice, 2022
- Digital advice is of most interest to under-55s
- Figure 11: Attitudes towards digital financial advice, 2022
- Providing quality advice at the right price is key
- Figure 12: Importance given to how advice is delivered compared to quality and cost of advice, 2022
- The five-year outlook for the financial advice market
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Issues and Insights
- Misconceptions about what constitutes “advice” are common …
- … and need to be urgently addressed
- Persuade people to step out of their comfort zone with free trials
- Firms must differentiate services to suit a wider range of consumer needs and budgets
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Size of the Intermediary Market
- The five-year outlook for the UK financial advice market
- Figure 13: Outlook for the financial advice market, 2023-27
- Number of intermediary firms contracted during the pandemic
- Figure 14: Number of regulated retail intermediary firms and total industry revenues, 2017-21
- Number of mortgage brokers has grown over the past five years
- Figure 15: Number of regulated retail intermediaries, by category of firm, 2017-21
- Industry revenues grew across all categories of firm in 2021
- Figure 16: Total retail intermediary revenues, by category of firm, 2017-21
- Industry fared reasonably well in 2022 …
- … but the outlook for 2023 is more gloomy
- The five-year outlook for the UK financial advice market
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Market Segmentation
- Many intermediaries provide advice on a range of areas
- Figure 17: Proportional distribution of retail intermediary revenues, by type of business, 2021
- 85% of investment income is generated from fees and charges
- Figure 18: Proportional distribution of retail intermediary revenues, by charging method and type of business, 2021
- Ongoing charges account for the bulk of advisers’ charging revenue
- Figure 19: Financial adviser firms’ revenues, by charging basis, 2021
- Financial advisers serve over three million clients on an ongoing basis
- Many intermediaries provide advice on a range of areas
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Market Drivers
- Consumers’ sense of financial wellbeing continues to ebb
- Figure 20: Household financial wellbeing index, 2016-23
- Most people are feeling the effects of price rises
- Figure 21: Proportion of adults who have been impacted by price increases and related issues, by age, 2023
- Many 35-64-year-olds need help making the most of the limited amounts they can afford to save
- Figure 22: Current financial situation, by age, 2022
- Challenging conditions increase the need for guidance and advice
- Consumers’ sense of financial wellbeing continues to ebb
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Regulatory and Legislative Changes
- New Consumer Duty comes into force this year
- FCA consults on a new simplified advice regime
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Competitive Environment
- Over 11,000 firms serve the UK’s retail advice market
- Financial adviser population continues to expand
- Figure 23: Number of regulated firms and staff advising on retail investment products, by type of firm, 2021
- Largest financial adviser firms employ nearly half the adviser workforce
- Figure 24: Number of financial adviser firms and staff advising on retail investment products, by size of firm, 2019
- Banks and building societies continue to cull mortgage advisers
- Figure 25: Number of firms and staff advising on mortgages, by type of firm, 2021
- Most mortgage brokers operate at a local level
- Figure 26: Number of mortgage brokers and staff advising on mortgage products, by size of firm, 2021
- Connells Group is one the UK’s largest mortgage distributors
- Recently acquired online mortgage brokers seek to expand
- 95% of insurance intermediaries are micro or small firms
- Figure 27: Segmentation of insurance intermediaries, by size of firm based on average revenues, 2021
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Digital Developments and Innovation
- FCA paves the way for further digitisation of advice
- Platforms respond to changing market dynamics
- First Wealth launches hybrid advice platform
- Netwealth unveils a free wealth tracking service and a low-cost financial planning service
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Types of Advice Sought
- Two thirds of UK adults have sought financial advice in the past …
- Figure 28: Proportion of UK adults who have sought financial advice on specific areas, 2022
- … but a much smaller proportion are receiving advice on a regular basis
- Figure 29: Proportion of all adults who have sought professional financial advice on specific areas within the past two years or longer ago, 2022
- Mortgage and protection intermediaries serve a broader client base
- Only 37% of over-45s have sought pensions advice
- Figure 30: Proportion of over-45s who have sought professional financial advice on specific areas within the past two years or longer ago, 2022
- Offer people the chance to try out digital services for free
- Two thirds of UK adults have sought financial advice in the past …
-
Sources Used to Find an Adviser
- Most people find their adviser online or via a recommendation
- Figure 31: Method of sourcing adviser, by age, 2022
- One in four used an adviser at their bank or building society
- 37% of over-65s had an existing relationship with their adviser
- Most people find their adviser online or via a recommendation
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Financial Priorities
- Shoring up savings and sticking to a budget are the top financial priorities
- Figure 32: Financial priorities for the next 12 months, by housing tenure, 2022
- Debt repayment is more pressing for young families and mortgage holders
- Certain priorities are better suited to advice, others guidance
- Saving for retirement is not a priority for most adults …
- … including over-55s, many of whom are struggling to live within their means
- Figure 33: Financial priorities for the next 12 months, by age, 2022
- Shoring up savings and sticking to a budget are the top financial priorities
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Financial Objectives
- 56% of adults have given themselves a financial goal this year
- Figure 34: Financial objectives for the next 12 months, by housing tenure, 2022
- Financial priorities and objectives are closely linked
- Figure 35: Financial priorities for the next 12 months, by type of financial objective, 2022
- 56% of adults have given themselves a financial goal this year
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Demand for Financial Advice
- The need for advice is largely being unmet
- Figure 36: Proportion of adults who would like to receive personalised advice, 2022
- Under-45s are keener on getting advice than over-45s
- More female advisers and role models are needed to address the gender advice gap
- Improve targeting of ethnic minorities and families to capitalise on higher rates of interest
- High level of interest in advice by those prioritising protection insurance
- Figure 37: Proportion of adults who would/might like to receive personalised advice, by type of financial objective/priority, 2022
- The need for advice is largely being unmet
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Willingness to Pay for Advice
- 59% of those interested in advice would be willing to pay for it …
- Figure 38: Willingness to pay for personalised financial advice, 2022
- … but most would not pay over £250 for one-off advice
- Figure 39: Amount willing to pay for personalised financial advice, 2022
- 59% of those interested in advice would be willing to pay for it …
-
Interest in Digital Advice
- People are more willing to try online advice since the pandemic …
- Figure 40: Attitudes towards digital financial advice, 2022
- … but concerns about data security persist
- Quality of advice is more important than the form it takes
- Figure 41: Importance given to how advice is delivered compared to quality and cost of advice, 2022
- People are more willing to try online advice since the pandemic …
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Appendix – Data Sources, Abbreviations and Supporting Information
- Abbreviations
- Consumer research methodology
About the report
This market report provides in-depth analysis and insight supported by a range of data. At the same time, introductory and top-level content is provided to give you an overview of the issues covered.
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