Consumers and Online Financial Advice - UK - March 2020

OVERVIEW
What you need to know
EXECUTIVE SUMMARY
The market
Use of mobile devices for managing finances and shopping continues to increase
Banks continue to close branches
Savings inequality highlights the need to democratise advice
Figure 1: Value of savings and investments, by age, October 2019
FCA continues to assess the advice market
FCA to introduce the Directory
Opportunities for advisers arising from a changing pensions landscape
Companies and brands
High-street banks use robo-advice to appeal to the mass market
Potential for automation: from retirement planning to insurance
The Money Advice Service adds an official WhatsApp contact channel
The consumer
Only half have received professional advice
Figure 2: Use of financial advice for different products, by products arranged or amended in the last three years, December 2019
Online channels are as popular as phone services
Figure 3: Use of financial advice, by channel, December 2019
Consumers more likely to turn to banks/building societies for advice…
Figure 4: Use of financial advice, by source and channel, December 2019
Website-based chat is more appealing than video chat/messaging apps
Figure 5: Online channel consideration, December 2019
A majority don’t know how much online advice should cost
Figure 6: Perceived cost of online advice, December 2019
Price and quality are the main purchase drivers of advice
Figure 7: Purchase drivers of financial advice, December 2019
Awareness of Open Banking remains low
Figure 8: Awareness of Open Banking, December 2019
Half would be willing to share data with an adviser via Open Banking
Figure 9: Willingness to use Open Banking for financial advice, by product, December 2019
What we think
ISSUES AND INSIGHTS
Charging the right price at the right time
The facts
The implications
Open Banking: a perfect ground for online advice to build on
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
Use of mobile devices for managing finances and shopping continues to increase
Banks continue to close branches
Savings inequality highlights the need to democratise advice
FCA continues to assess the advice market
FCA to introduce the Directory
Opportunities for advisers arising from a changing pensions landscape
MARKET DRIVERS
Use of mobile devices for managing finances continues to increase
Banks continue to close branches
Savings inequality highlights the need to democratise advice
Figure 10: Value of savings and investments, by age, October 2019
THE REGULATORY ENVIRONMENT
FCA continues to assess the advice market
Review of the impact of RDR and FAMR
Second Assessing Suitability Review
FCA to introduce the Directory
Opportunities for advisers arising from a changing pensions landscape
New rules on “wake-up” pension packs take effect
Pensions Schemes Bill paves the way for delayed Pensions Dashboards
COMPANIES AND BRANDS – WHAT YOU NEED TO KNOW
High-street banks use robo-advice to appeal to the mass market
Vast potential for automation beyond investing
The Money Advice Service adds an official WhatsApp contact channel
COMPETITIVE STRATEGIES AND INNOVATION
High-street banks use robo-advice to appeal to the mass market…
Using automated services as a first step towards investing…
...or to cover all customer bases
…but some established providers opt to focus on existing client base
Automation has potential in retirement planning…
…and insurance
Online mortgage brokers bet on free and convenient services
The Money Advice Service adds an official WhatsApp contact channel
LBG continues to expand its remote advice service
THE CONSUMER – WHAT YOU NEED TO KNOW
Only half have received professional advice
Online channels are as popular as phone services
Website-based chat is more appealing than video chat/messaging apps
A majority don’t know how much online advice should cost
Price and quality are the main purchase drivers of advice
Half would be willing to share data with an adviser via Open Banking
PRODUCT ENGAGEMENT AND USE OF ADVICE
Insurance and savings are the most common products to arrange
Figure 11: Products arranged or amended in the last three years, December 2019
Only half have received professional advice…
Figure 12: Use of financial advice for different products, December 2019
…most commonly for ‘complex’ products
Figure 13: Use of financial advice for different products, by products arranged or amended in the last three years, December 2019
Mortgages are an opportunity for early engagement with advice…
…and investments hint at the potential of automation
CHANNELS USED FOR FINANCIAL ADVICE
Face to face still the most popular way of receiving advice…
…and online is as common as telephone
Figure 14: Use of financial advice, by channel, December 2019
Banks/building societies benefit from extensive presence in the high street
Figure 15: Use of financial advice, by source and channel, December 2019
Online channels more relevant for other sources of advice
Opportunity for employers to step up…
…and face fewer barriers in terms of existing preference for traditional channels
ONLINE CHANNEL CONSIDERATION
The appeal of website-based chat
Figure 16: Online channel consideration, December 2019
An important minority are generally open to automated advice
Figure 17: Automated channels consideration – CHAID analysis, December 2020
EXPECTATIONS OF ONLINE FINANCIAL ADVICE COSTS
A majority don’t know how much online advice should cost
Figure 18: Perceived cost of online advice, December 2019
People with experience of advice are more open to paying more for it
People still perceive automated services as inferior
PURCHASE DRIVERS OF FINANCIAL ADVICE
Price and quality are the main drivers
Convenience and innovation are not at the top of people’s minds
Figure 19: Purchase drivers of financial advice, December 2019
Ethical credentials are more relevant than environmental ones
Potential to explore sustainability themes in the investment market
Under-25s more likely to focus on fewer aspects
Figure 20: Repertoire of purchase drivers of financial advice, December 2019
FINANCIAL ADVICE AND OPEN BANKING
The potential of Open Banking
Awareness remains low…
Figure 21: Awareness of Open Banking, December 2019
…but is higher among men and young people
Figure 22: Awareness of Open Banking, by age and gender, December 2019
Half would be willing to share data with an adviser via Open Banking
Figure 23: Willingness to use Open Banking for financial advice, by product, December 2019
Willingness to share data is higher among younger generations…
Figure 24: Willingness to use Open Banking for financial advice, by age, December 2019
…and those who are aware of Open Banking
Figure 25: Willingness to use Open Banking for financial advice, by awareness of Open Banking, December 2019
Affluent consumers more willing to share information from a variety of products
Figure 26: Repertoire of products people would share with an adviser via Open Banking, December 2019
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology
CHAID analysis methodology
Figure 27: Online channel consideration – CHAID – table output, December 2019
Figure 28: Awareness of Open Banking – CHAID – table output, December 2019