Please Advise Me: Advice Gap in the UK Working Party

Abstract

Thanks for joining the session today.This is an Institute and Faculty of Actuaries (IFoA) sessional on the Advice Gap in the UK Market.My name is George Ritchie.I am a manager in the long-term savings policy team at the Association of British Insurers (ABI).I have been leading our work on financial advice and guidance for a couple of years.The reason we are here today is very simple: "The Advice Gap in the UK Market" Working Party has produced an excellent piece of research, titled "Please Advise Me".Quite a captivating title, I thought, hinting at what the advice gap is all about.What will also be captivating is the presentation that Chris Barnard, chair of the Working Party, and Robin Duffy will give on the research.Like any good piece of research, there is plenty of data referenced, and a couple of statistics stood out to me when I was reading it in advance of the session.One was that most people do not receive financial advice.Most are not willing to spend more than 250 to access it, which is well below current prices for financial advice.Over half of consumers who have received guidance found that it was a little helpful, but only about 20% found it really helped a lot in their decisionmaking.Finally, 71% of adults did not receive any support about investments or savings into a pension or retirement planning in the full year up to May 2022.For me, that is the advice gap in a nutshell.Advice is good but it is hard to access.Guidance is okay but it is not that helpful.Many people continue to receive no support, so a solution is required.In the paper, it is clear that there is no silver bullet.I probably would not have a job if it was that straightforward.The Working Group probably would not exist either.Fortunately, a lot of the important players also agree that a solution is necessary, across the political spectrum.The Financial Conduct Authority (FCA) and the Treasury announced their Advice Guidance Boundary Review in 2022.It got properly underway in 2023.The objective has been to start getting people the help they want, when they need it, at prices they can afford.The General Election in 2024 did not change anything.The current Chancellor referenced the Advice Guidance Boundary Review as part of her Mansion House speech, citing it as an example of how the UK is going to start regulating for growth rather than for risk.It gives me confidence that even though just half an hour ago a new Minister for Pensions was announced, the review will remain high on the agenda.It has cross-party support, which is excellent.The star proposal of the Advice Guidance Boundary Review, to date, has been this idea called "targeted support".You might have heard a little bit about it.It is designed for the mass market.Automatically enrolled pension customers are front and centre of the FCA's current open consultation on a targeted support framework.I think this discussion and this paper came at just the right time to help us respond to the FCA's consultation paper on targeted support.Given its prominence in the debate, I wanted to take a couple of minutes to explain what targeted support is about before we get into this presentation.