These transactions are infrequent and often alienating.
With a low uptake of regulated financial advice, people are turning to other channels to educate themselves. If nothing else, this highlights a breakdown in how financial institutions communicate with customers.
Whether an issue of trust, fear of consequences, or simply that information is still delivered in a dated, unhelpful way, we cannot ignore that the only place people are not turning to in numbers are the experts.
Access to advice and guidance
The most recent Financial Lives survey from the Financial Conduct Authority will have, for many, given incredibly worrying feedback.
Alongside the general malaise with regard to financial service providers and a likely pension crisis a few years ahead, the general uptake of financial advice from regulated channels is low.
And yet, there has been an increase in people – nearly 30 per cent – seeking financial support from unregulated public resources. This includes the Citizen’s Advice Bureau, Which?, and MoneySavingExpert.com.
This should alert us to an urgent need to re-establish trust with consumers.
People can often make bad financial decisions based on need and desperation, eager to solve the problem right in front of them rather than look at the longer-term implications.
In the cost of living crisis, one glaring issue is the widening gap between those who possess the knowledge and skills to effectively manage their finances and those who are struggling to grasp the basics.
This disparity often is exasperated when financial institutions are not always proactive in reaching out to their customers with advice or educational resources. The result is a cycle of uninformed choices that can further entrench their financial difficulties.
However, there is a way out of this cycle. Access to advice and guidance can be transformative. When individuals are provided with the tools and knowledge to make sound financial decisions, their confidence levels receive a much-needed boost.
Their trust in financial institutions is gradually rebuilt and as a result, people are more likely to reach out for assistance at earlier stages, reducing the potential for major financial damage.
Consider recent findings from Aviva. They paint a stark picture whereby only 44 per cent of individuals comprehend the impact of inflation on their savings, and a mere 37 per cent grasp the concept of compound interest.
These statistics underscore that the advice needed is not necessarily overcomplicated. Rather, it is about pinpointing the areas individuals struggle with and offering them tailored learning experiences.
