2.7 million take out financial products before doing any research
The International Longevity Centre-UK has undertaken new analysis of the Wealth and Assets Survey which reveals that older consumers are significantly more likely to be influenced by IFAs or providers, than by best buy information on websites.
Homeowners are also significantly more likely to be influenced by an IFA when choosing to take out a financial product.
Consumers who are most financially able, i.e. those who report that they know exactly how much they have in their bank account, are also more likely to choose DIY financial solutions, by surfing best buy websites or shopping around.
The number of people not collecting any information, or just relying on friends and family before taking out a financial product is significant – about 4.4 million. Among them, older consumers (aged 75 plus) tend to be over-represented.
ILC-UK points out that those who are burdened by debt do not reach out. Among consumers who felt burdened by debt (approximately 17% of the sample), only about 1 in 8 (or 12.7%) received any advice at all to help them deal with their debts, and among them, 3 in 5 received advice from a free agency.
Cesira Urzì Brancati, Research fellow at the ILC-UK said: “The demand for independent financial advice is mainly driven by trust. We will not expand access to advice without action to raise trust in guidance.
Sadly, this too often does not reach those who need it the most. For some, however, overconfidence is an impediment to getting helpful information.
Making financial advice mandatory may not have good results. Experimental evidence from the US showed that unsolicited advice has no effect on investment behaviour – only those who want guidance and ask for it will act accordingly.
Our research highlights again the importance of Government and industry supporting a mid retirement financial health check. We need to ensure that people making important financial decisions in their 70s and beyond, get the support they need”.