- Just 38 per cent understand financial products well.
- Research shows surge in demand for independent advice
Investment, pensions and protection products leave up to five out of 10 adults baffled, a survey by Defaqto showed.
Research showed just 38 per cent of people – around 17.6 million adults – claim to understand investment, pension and protection products well2. Millions more are confused by the huge range of choices which for investments alone include around 1,600 unit trust and OEIC funds.
And the lack of understanding is prompting a rush to independent financial advisers – some 6.2 million people plan to visit IFAs over the next 12 months. The benefit of seeking independent experts to guide consumers through the financial maze is demonstrated by the research but there is a split between how much and in what way consumers are willing to pay.
Defaqto found more than 2.1 million have paid a fee for independent financial advice over the last two years. Another 2.9 million have paid fees more than two years ago.
However another 7.6 million people have seen an IFA but not paid directly for the advice instead paying commission on products they have purchased on the adviser’s recommendation.
Defaqto sales and marketing director Neil Morgan said: “Increasingly we all need to take responsibility for our own finances and need to understand pensions, investment and protection products. However it is clear that many people do not understand these crucial financial products which are important in securing a comfortable retirement, funding day-to-day living and protecting ourselves and our families if the worst happens.
“To some extent it is understandable that people are baffled. The finance industry specialises in producing more and more products.
“IFAs are the best source of advice and Defaqto is committed to supporting them through the launch of our Aequos Engage database which empowers advisers to provide the best possible support to clients.”
Aequos Engage, which has taken two years to develop, will revolutionise the advice process for IFAs by enabling them to sift through all the product options in each product area in a matter of minutes.
And crucially its functionality and simplicity allows advisers to demonstrate their independence and also to prove that they adhere to best practice principles and are compliant with ever changing regulations.
