Consumer confusion reigns one year after shake up of financial advice market

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31 May 2006 

• 90% of people say seeing an ‘independent’ adviser is important to them
• 36 million (84%) UK adults* admit they don’t understand the different types of financial advice available
• 72% of people who took advice in the last year think they saw an IFA – ‘a dream scenario, but far from reality,’ says IFA Promotion

A year on from the radical shake-up of the financial advice market by the FSA, 84% of UK adults say they simply don’t understand the different types of advice now available, according to new research from IFA Promotion, the organisation promoting the benefits of independent financial advice.     

The concept of independent financial advice is more popular then ever:

• 90% of people say that seeing an “independent” adviser is important to them
• 95% of people say it is important that the adviser can recommend the most suitable products from the whole of the market; and 88% say it is important that an adviser has no commercial ties to product providers.

However the research makes clear that what people want is not what they’re getting.  Of the 6.6 million people who saw an adviser in the last 12 months, 72% believe they saw an IFA, just 10% think they saw a multi-tied adviser and 13% believe they took advice from a tied adviser.

David Elms, Chief Executive of IFA Promotion, points out, “This would indeed be a dream scenario, but it is unfortunately far from reality.  Our annual research** confirms that nearly twice as many people end up taking advice from a bank or building society as see an IFA, although most clearly prefer the concept of independent financial advice.  We’ve put well over half a million people in touch with an IFA this year, but would clearly welcome broader support to educate consumers about their options.”

Elms continued, “The FSA introduced the biggest changes to the financial advice market for sixteen years to offer clearer choices and make it easier for people to shop around. However only 27%* of people who have taken financial advice in the last year actually feel they know the difference between the three different types of advice.  Given this widespread confusion, there has never been a more important time to relay to consumers the benefits of seeking whole of market, independent financial advice, and most importantly, how to find it.”

To find out all about the different types of financial advice, people should visit www.unbiased.co.uk/beadvised 

-ENDS-

*YouGov survey of 2166 UK adults in May 2006.

**Latest MORI research, commissioned annually by IFA Promotion, was conducted among a nationally representative sample of 2040 UK adults (aged 16+) across Great Britain, 12^th-18th January 2006 on behalf of IFA Promotion.

For further information please contact:

David Elms                Richard Winder/Chloe Mann
Chief Executive        Lansons Communications
IFA Promotion           020 7294 3641 / 020 7294 3681
020 7833 3131

    For expert comment or case studies from over 200 media-friendly IFAs, journalists should call IFA Promotion’s Media Services hotline on 020 7294 3682 or search online in ‘Media Services’ at www.unbiased.co.uk

1.  Independent Financial Adviser Promotion

IFA Promotion was established in 1989 to promote the value and accessibility of independent financial advice to the public.  It represents around 9,000 firms of independent financial advisers across the UK and is sponsored by 31 leading financial institutions. In the past 12 months, over 530,000 consumers and businesses used IFA Promotion to find local independent financial advice.

IFA Promotion believes Independent financial advice should be:

• Affordable.  The option to take independent financial advice should be available, by right, to all - not just the wealthiest in society.
• Convenient.  IFAs should be available in the location of the consumer’s choice, wherever they live in the UK.
• Transparent.  It must be clearly transparent to consumers who is able to offer independent financial advice and who is not.

2.      Independent Financial Adviser Promotion’s sponsors

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