Millions of people are making major financial decisions without professional help, often because regulated advice has been out of reach for those without significant savings. But that is starting to change, with advice firms experimenting with lower-cost services and new rules allowing larger firms to offer free tailored support.
According to the financial watchdog, only nine per cent of UK adults currently receive financial advice. This has created a widening 'advice gap' between wealthier people and those left to make complex decisions alone. However, new research from Dynamic Planner shows 54 per cent of advice firms are exploring lower-fee or flat-fee offerings, while 41 per cent are introducing low-cost or free guidance services.
Data suggests that advice can be highly beneficial. The International Longevity Centre found that the average household receiving advice is £48,000 better off in pensions and investments than those that never get advice. Even small increases in returns can snowball: £10,000 invested at 7.5 per cent annual return would grow to £66,144 after 30 years, even after a one per cent annual advice fee, compared to £32,434 in a 4 per cent savings account.
Martin Rayner, a financial adviser at Compton Financial Services, said: 'For regular households, financial advice can absolutely be worth it because the biggest benefits are often about avoiding expensive mistakes and building long-term financial security.' He added that advisers help with budgeting, tax allowances, protection, and planning for goals like buying a home or retirement.
Historically, firms charged a percentage of investments, but new models include flat fees or lower ongoing costs. Artificial intelligence and technology are reducing administration, making advice more affordable. For example, Becketts Connect charges a starting fee of £495 for a financial plan and review every two years, with ongoing support at £25 per month. Advanta Direct charges a minimum of £1,000 per year.
