Editor’s Comment: Has Financial Planning failed?

It’s the first time it is taking place in chilly January as it’s usually held in Autumnal October.

Let’s hope the shift rejuvenates a campaign which has become a little low key in recent years.

To be fair, Financial Planning Week is a laudable, if modest, campaign and I would urge all planners to try to do something during the week to spread the message about the benefits of Financial Planning.

Even a Tweet or a LinkedIn post can help.

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Looking through some of the research published to coincide with the week it occurred to me that a week is not nearly enough time to promote Financial Planning, given the woeful take up of financial advice take in the UK.

In fact there is a good argument to put forward the view that as far as mass market services go, financial advice has utterly failed to transform savings habits and financial plans across the nation.

The FCA Financial Lives Survey last year found that only 8% of people had taken professional financial advice in the previous 12 months.

Financial Planning is simply too small a sector to meet the potential demand. In fact it doesn’t. I doubt more than a few hundred thousand people are served by Financial Planners. Those clients are well off, in the main, and value the professional advice they get and seem happy to pay fees but they are not mass market.

Indeed a survey we covered this week from Canada Life and AKG found that not only are many people not getting advice but 23% of consumers, nearly one in four, say they would never seek financial advice – even if it was free (if I was a financial adviser that last would hurt…)

The same research found that nearly half of consumers had never seen a financial adviser and more than one in 10 said they would not trust a financial adviser.

All of this suggests there is a long way to go.

We can’t blame consumers who have spent years reading stories about advice scandals, failed advice firms and financial mis-selling for being reluctant to see an adviser. Many do not know where to start or who to trust.

The BSPS scandal is a good case in point. When BSPS came along the advice industry had a once in a lifetime chance to rise to a major challenge but what happened instead? Hundreds of BSPS members got horribly ripped off by rogue advice firms feeding on them like vultures, leaving the FSCS to pick up the pieces and the cost.

It’s no wonder the FCA wants to open the door to cut-down financial guidance services to bridge some of the gap between the potential demand and the ability of a small profession to handle that demand.

As many of you will know, I am a big supporter of well trained, highly qualified Financial Planners. I have said before that a good Financial Planner is worth their weight in gold. I have no hesitation in recommending the profession.

But as Financial Planning Week begins, ironically, it seems to be getting harder and harder to find or afford good quality Financial Planning advice and that needs to change.

Some of the failings are due to Financial Planning being too small a sector to reach or serve the mass market and that needs to be addressed first and foremost.

A plan to build a much bigger profession would be a good starting point.

• Our latest issue of Financial Planning Today magazine has just been published. Here’s link to view the issue with my compliments: https://bit.ly/2ZdVXWz. If you have any questions or want to drop me a line to provide feedback you can reach me on editor@portfoliopublishing.co.uk. I reply to as many messages as I can.

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Kevin O’Donnell is editor of Financial Planning Today and a journalist with 40 years of experience in finance, business and mainstream news. This topical comment on the Financial Planning news appears most weeks, usually on Fridays but occasionally other days.  Email: editor@portfoliopublishing.co.uk Follow @FPT_Kevin

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