2022
9
UK Consumers and Financial Advice Market Report 2022
2022-03-24T03:06:57+00:00
OX1100853
2195
149327
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Report
en_GB
“The financial advice market has undergone significant digitisation in recent years. This is set to continue as hybrid and fully-online advice services become commonplace. There are opportunities for providers to…

UK Consumers and Financial Advice Market Report 2022

£ 2,195 (Excl.Tax)

Description

The UK Consumers and Financial Advice report identifies consumer attitudes towards the intermediary market, competitive strategies, and barriers to seeking financial advice in the UK. This market report covers the market size, market forecast, market segmentation and industry trends for the Consumers and Financial Advice market in the UK.

Current Market Landscape

Industry activity highlights a movement towards online financial advice services. With many consumers now using online services to seek financial advice, this shows that consumers are warming to digital advice and the convenience it can provide. Consumers still demand some in-person interaction, however, whether that be in-person, over the phone or through a video call.

  • 46% of consumers who have sought financial advice in the past three years used an online service.
  • In 2020, total revenue was up by 2% on 2019 and by 17% since 2016.
  • 61% of consumers have arranged or changed financial products in last three years.

Inflationary pressures have placed a spotlight on financial wellbeing and the cost of living in the UK. This provides both challenges and opportunities for advisers. For many, the rising cost of living will mean paying for financial advice is simply out of reach and a non-starter. For others, however, who are able to manage higher inflation, the desire to make the most of their money during tighter times could raise the appeal of paying for professional advice.

Future Market Trends in Consumers Seeking Financial Advice

External economic factors are the biggest threat to the financial advice market, including inflationary pressures and property market activity. The advice market relies heavily on other sectors to promote new business. As observed in 2020 with the property market, a lack of activity can have a direct impact on revenue for advisers.

Technology continues to be the biggest opportunity in the financial advice market. Digitisation of offerings makes advice services more accessible and convenient. Providers must continue to ensure that consumers’ demands are being met, as there is still a significant portion of customers who still want some human interaction when using advice.

Read on to discover more details or take a look at all of our UK Financial Services market research

Quickly understand

  • Market size and segments of the retail intermediary market.
  • Regulatory context of the financial advice market.
  • Competitive strategies, advertising and launch activity within the advice market.
  • Use of financial advice.
  • Financial advice channels and how consumers found their advisers.
  • Barriers to seeking financial advice.
  • Attitudes towards, and consideration of, financial advice.

Covered in this report

Brands: Legal & General, JB Morgan Chase, Moneyfarm, Aviva, M&G, Fintuity, Chancery Lane, Lloyds Banking Group, Goldman Sachs, Addition Wealth, FCA, Skipton Building Society, Think Money, Bank of Scotland, Blevins Franks Financial Management.

Expert analysis from a specialist in the field

This report, written by Natasha Hayes, a leading analyst in the Financial sector, delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

The financial advice market has undergone significant digitisation in recent years. This is set to continue as hybrid and fully-online advice services become commonplace. There are opportunities for providers to better educate consumers about financial advice to draw more people to the market.

Natasha Hayes
Financial Services Analyst

Table of Contents

  1. Overview

    • Key issues covered in this Report
    • Market context
    • Products covered in this Report
  2. Executive Summary

    • The five-year outlook for financial advice
      • Figure 1: Category outlook, 2022-26
    • The market
    • Advice revenue totalled £24.2 billion in 2020
      • Figure 2: Number of firms and revenue for regulated retail intermediaries, 2016-20
    • Insurance intermediaries dominate advice revenues
      • Figure 3: Total retail intermediary revenue, by category of firm, 2016-20
    • Companies and brands
    • Strategies focus on digital services
    • The consumer
    • 61% have arranged or changed financial products in last three years
      • Figure 4: Financial products arranged or changed over the last 3 years, 2022
    • Uptake of financial advice is over 50%
      • Figure 5: Professional financial advice sought when arranging or amending financial products, 2022
    • Consumers use a range of advice channels
      • Figure 6: Financial advice channel use, 2022
    • Consumers find advice through many avenues
      • Figure 7: How consumers find professional advisers/advice services, 2022
    • Confidence and perceived irrelevance are main barriers to advice
      • Figure 8: Barriers to seeking professional financial advice, 2022
    • Reasons to consider advice varies by age
      • Figure 9: Reasons to consider professional financial advice in the future, 2022
    • There is misunderstanding around what advice entails
      • Figure 10: Attitudes toward financial advice, 2022
  3. Issues and Insights

    • Cost of living pressures place spotlight on financial wellbeing
    • Consumers are open to a variety of channels to financial advice…
    • …and online services continue to widen access
    • There are opportunities to improve financial literacy
  4. Market Size and Performance

    • Category outlook for financial advice market
      • Figure 11: Category outlook, 2022-26
    • Revenues up by 0.5% in 2020
      • Figure 12: Number of firms and revenue for regulated retail intermediaries, 2016-20
    • Insurance intermediaries dominate advice revenues
      • Figure 13: Total retail intermediary revenue, by category of firm, 2016-20
    • Most advice firms use fees and charges
      • Figure 14: Total retail intermediary revenues, by charging method and type of business, 2020
  5. Market Segmentation

    • Most firms have between one and five advisers
      • Figure 15: Number of new firms and staff advising on retail investment products, by type of firm, 2020
      • Figure 16: Number of financial adviser firms and staff advising on retail investment products, by size of firm, 2020
    • Insurance intermediary segment dominated by firms with largest revenues
      • Figure 17: Number and average revenue of insurance intermediaries, by size of firm based on average revenues, 2020
    • Long-term insurance
      • Figure 18: Use of advice in the long-term insurance market, by total new premiums, 2021
    • General insurance
      • Figure 19: Distribution of general insurance business (personal lines), by gross written premium, 2020
    • Advice on mortgage products
      • Figure 20: Number of firms and staff advertising on mortgage products, by type of firm, 2020
  6. Market Drivers

    • Inflationary pressures and cost of living crisis grips UK economy…
    • …creating opportunities for advice firms
    • Bank rates increase
    • Property transactions are falling again
      • Figure 21: UK residential property transactions over £40,000, 2017-21
    • Citizens Advice identifies four key opportunities to promote advice
  7. Regulatory Context

    • Automation can blur the boundary between advice and guidance
    • Regulatory intervention puts price pressure on firms
    • RDR and FAMR evaluation
    • Firm fee hikes
    • Risk-based levies
    • FCA is implementing new consumer duty rules this year
    • Insurance intermediaries should be aware of new FCA pricing rules
  8. Competitive Strategies

    • Competitive strategies focus on technology and data
    • Digital strategies provide convenience to consumers…
    • …although hybrid models may provide the best experience
    • Strategic partnerships
    • Providers focus on acquisitions…
    • …and partnerships
    • Innovation creates opportunities to work with other institutions
  9. Launch Activity

    • Wealth managers launch online offerings
    • Pensions robo-adviser launched by Chancery Lane
    • Embark launches robo-adviser
    • Goldman Sachs to launch Marcus UK robo-adviser
    • Employee benefits in the US demonstrate further opportunities for growth
  10. Advertising and Marketing Activity

    • Regulator is biggest spender on advertising
      • Figure 22: Total above-the-line, online display and direct mail advertising expenditure on financial advice (independent and non-independent), 2017-21
    • Chancery Lane spends big on retirement planning
    • Nielsen Ad Intel coverage
  11. Financial Product Engagement

    • Two thirds of consumers have arranged or amended financial products
      • Figure 23: Financial products arranged or changed over the last 3 years, 2022
    • Highest savers have arranged/amended savings products
      • Figure 24: Value of savings by those who have arranged or amended a savings product in the last 3 years, 2022
  12. Use of Financial Advice

    • Over half have sought professional financial advice
      • Figure 25: Professional financial advice sought when arranging or amending financial products, 2022
    • Tax/inheritance planning, mortgages and protection most likely to prompt advice
      • Figure 26: Use of financial advice in the last three years, by products arranged or amended in the last three years, 2022
    • However, some consumers may misunderstand the meaning of advice
      • Figure 27: Understanding of the difference between financial advice and guidance, by use of advice in the last three years, 2022
  13. Financial Advice Channels

    • Face-to-face appointments have declined since the start of the pandemic
    • Opportunity for hybrid advice models is evident
      • Figure 28: Financial advice channel use, 2022
    • Younger consumers more likely to have used online channels
      • Figure 29: Financial advice channels, by age, 2022
    • Automated advice services could offer a more affordable option
      • Figure 30: interest in automated advice services, by financial advice channel used, 2022
  14. Finding Financial Advice Services

    • Consumers use many channels to find advice services
      • Figure 31: How consumers find professional advisers/advice services, 2022
    • Younger consumers are more open to a variety of sources
      • Figure 32: How consumers find professional advisers/advice services, by age, 2022
  15. Barriers to Seeking Financial Advice

    • Confidence in decision making is the biggest barrier to advice…
      • Figure 33: Barriers to seeking professional financial advice, 2022
    • …but confidence is lacking among under-35s
      • Figure 34: Barriers to seeking financial advice, by age, 2022
  16. Reasons to Consider Financial Advice

    • 71% of consumers can identify a reason to seek advice
      • Figure 35: Reasons to consider professional financial advice in the future, 2022
    • Buying a home and debt management are the top prompts for advice among under-25s…
    • …while interest in retirement advice grows with age
      • Figure 36: Reasons to consider financial advice, by age, 2022
  17. Attitudes towards Financial Advice

    • Consumers are confident, perhaps overconfident, in their understanding of financial terms
      • Figure 37: Attitudes toward financial advice, 2022
    • Advisers could do more to make advice charges clearer…
      • Figure 38: Understanding of how advisers charge for services, by use of financial advice in the last three years, 2022
    • …and demonstrate the value of professional advice
    • Data privacy is an important area for progress
  18. 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.

Market

Mintel provides a range of market information, frequently through the category level, including market size and forecasting, complete with market drivers that illustrate the forces that shape a category or market.

Consumer

Mintel’s proprietary consumer research provides our analysts with the attitudinal and behavioral data used to provide valuable insight to topical issues.

Brand/Company

Mintel provides overviews of the top brands and manufacturers, and uses consumer research to explore attitudes and reactions to brands, as well as insight into what will resonate with consumers.

Data

Market reports provide appendices of data to support the research and insight produced. Our databooks* are easily manipulated and downloadable to support your research needs and covers factors from consumer attitudes to market forecasts.

*databooks not available with UK B2B Industry reports.

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