New in-depth survey of financial advisers by NS&I reveals high level of confidence about the future of the industry
- 8 in 10 financial advisers are confident about future prospects for the industry
- Cash deposits still a key component in advisers’ proposition to clients
- Advisers say that security is the No.1 priority for clients
National Savings and Investments (NS&I) is today launching the first edition of its new Financial Advice Barometer – a quarterly survey of financial advisers. It finds that 83% of advisers are currently either ‘very confident’ or ‘fairly confident’ about the future prospects for the financial advice industry.
The first edition of the barometer shows trend data collected from the first three quarters of fieldwork – conducted in February, May and July 2016. Since February, confidence among advisers in the industry has been consistently high, peaking in May with a score of 90% either ‘fairly confident’ or ‘very confident’. Comments from the respondents suggest that the reason that most advisers feel confident about the future of their profession is the increased complexity facing consumers in today’s financial world. In their view, this in turn leads to a greater need for professional financial advice.
Each quarter, the barometer also asks one-off topical questions. The July survey asked advisers whether significant market uncertainty or volatility encouraged them to move a bigger proportion of their clients’ funds into cash. Just under half (48%) of advisers, answered ‘yes’ or ‘sometimes’.
The topical question asked in February’s survey suggested that the potential impact of ‘robo-advice’ on the industry may be overstated. Three-quarters (75%) of advisers said they were ‘not that concerned’ or ‘not at all concerned’ about the impact that robo-advice could have on their business in the future, with many respondents citing the importance that clients still attach to face-to-face meetings. Meanwhile, only 3% of advisers were ‘very concerned’ about the impact of robo-advice on their business.
Other key findings in the first edition of NS&I’s Financial Advice Barometer are:
The cash deposit market remains king
Over half (51%) of advisers provide guidance on cash deposits, but the client invests in the products themselves. 43% of advisers include cash in their advice proposition as part of their holistic financial planning review with clients. Only 4% of respondents said they do not discuss cash deposits with their clients.
70% of respondents in the July survey recommend that at least 10% of an investment portfolio is held in cash deposits, with more than a fifth (23%) recommending that cash should make up at least 20%.
More than three quarters of advisers (76%) currently recommend shorter length terms of either one year (49%) or two years (27%) when advising on fixed-term cash deposits. For two year terms, this represents a noticeable decline since February, at which time 39% of respondents recommended this length of term.
Security is the most important priority
Advisers believe that security (protecting assets) is the most important priority for their clients in terms of savings and investment options, with 46% of respondents choosing this option in the July survey. Security has been cited as the highest priority across all three quarters of research, with scores of 51% and 59% recorded respectively in the February and May surveys.
The Financial Services Compensation Scheme (FSCS) limit of £75,000 leads seven out of ten (71%) of the respondents to advise their clients to spread cash deposit savings around multiple UK financial product providers. Approaching half of respondents in the July survey (45%) advise clients to invest more of their money in NS&I products than they might otherwise do due to the FSCS limit and the HM Treasury 100% security guarantee. This figure has risen compared to scores of 31% and 32% recorded in the February and May surveys respectively.
The most frequently recommended types of cash deposit products among the respondents in the July survey were fixed-term deposits (69%), easy access savings accounts (68%), Cash ISAs (61%) and Premium Bonds (57%).
Steve Owen, acting Chief Executive, NS&I, said:
“Although the financial advice market is rapidly changing, this first edition of NS&I’s Financial Advice Barometer suggests that cash deposits remain a key component in advisers’ proposition to their clients. More than 500,000 NS&I customers have invested over £50,000 with us and over 5,000 of our customers hold over £1 million, so it is extremely important that we engage with financial advisers. This new quarterly survey is a further way for NS&I to do that and at the same time provide insight into trends within the cash deposit market over time.”
Patrick Connolly, Certified Financial Planner at Chase de Vere, said:
“Constantly changing tax rules and huge differences between the best and worst savings and investments products mean there has never been a greater need for people to take financial advice. While most people like the prospect of growing their money, we find that many clients put more focus on capital protection, especially as they get older and want the assets they’ve built up to be secure. For advisers, this means there is an increasing need to appraise the cash savings market in order to meet their clients’ needs and provide holistic advice.”
The first edition of NS&I’s Financial Advice Barometer reports the findings of three sets of fieldwork conducted among financial advisers in February, May and July 2016 via an online survey. A series of financial advice market ‘tracker’ questions were asked together with one-off topical questions.
The tracker element of the Financial Advice Barometer will be repeated each quarter to build-up a picture over time of how trends within the financial advice market change, including advisers’ sentiment towards cash, how it is used within client portfolios and advisers’ views on the wider cash deposit market. New topical questions will be asked in the next and future editions of the barometer.
Notes to Editors
- NS&I’s Financial Advice Barometer is conducted by sending emails to around 4,000 financial advisers each quarter who are either registered on the Unbiased email mailing list or on the NS&I database. Respondents are entered into a prize draw for a chance to win an iPad mini.
- For the February 2016 survey, 1,015 people opened the email and 145 people responded to the survey, giving a 14% response rate. For the May 2016 survey, 893 people opened the email and 105 people responded to the survey, giving a 12% response rate. For the July 2016 survey, 905 people opened the email and 97 people responded to the survey, giving an 11% response rate.
- The Financial Advice Barometer will be sent to around 4,000 financial advisers each quarter, building up a picture over time of key trends in the cash deposit market.
- As well as this new Financial Advice Barometer, NS&I has been publishing its Quarterly Savings Survey since 2004. This survey of retail consumers has been running every quarter since autumn 2004, and provides a snapshot of how the nation is saving.
- NS&I is one of the largest savings organisations in the UK, offering a range of savings and investments to more than 25 million customers. All products offer 100% capital security, because NS&I is backed by HM Treasury.
- For further information, please contact the NS&I media team.