The financial advisory landscape has undergone significant transformation in recent years, particularly with the emergence of financial influencers, or ‘finfluencers.’ This shift raises an important question: Are ‘finfluencers’ deterring the public from seeking professional financial advice?
A recent discussion among industry professionals, as reported by FT Adviser, indicates a concern that the simplification of financial advice by ‘finfluencers’ might be dissuading individuals from consulting professional advisers. This viewpoint, however, merits a nuanced examination.
The Threshold for Professional Advice
Traditionally, financial advisers have targeted clients with substantial investable assets, often around £100,000. This threshold inevitably excludes a large segment of the population. In contrast, ‘finfluencers’ have democratised financial knowledge, making it accessible to a broader audience. This trend does not diminish the value of professional advice but rather fills a gap in financial literacy for those who might not meet the typical client profile of a financial adviser.
The Commoditisation of the Investment Market
Direct-to-Consumer (D2C) platforms like Vanguard, Interactive Investor, and AJ Bell have revolutionised investing, making it more straightforward for the general populace. As Christopher Woolard, the former CEO of the Financial Conduct Authority, pointed out, the majority of retail investors are well-served by simple, diversified, low-cost investments readily available from various providers. This observation suggests a commoditised investment market where the role of the adviser must adapt.
The Role of Financial Advisers in a Post-Consumer Duty World
While ‘finfluencers’ cater to basic financial education and simple investment strategies, there remains a critical role for financial advisers. This role is particularly pertinent for high net worth individuals or those facing complex financial situations. In a post-consumer duty world, the emphasis shifts towards providing value in areas where complexity and personalised guidance are necessary.
Reframing the Perception of Financial Advice
The industry must also consider how it communicates its value proposition. The FT Adviser article, rightly points out the need for clearer communication and engagement with the public. Financial advice is not always straightforward; sometimes, complexity is warranted. By reframing the public’s understanding of financial advice, advisers can delineate their role in guiding through intricate financial landscapes.
Conclusion
In conclusion, ‘finfluencers’ are not the adversaries of professional financial advice; rather, they serve as a complementary force. They provide basic financial literacy to a broader audience, while professional advisers offer tailored, complex guidance to those who need it. As the financial landscape evolves, there is a growing need for both simplicity in financial education and expertise in handling intricate financial matters. Acknowledging and embracing this duality is key to serving the diverse financial needs of the public.
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