NS&I survey reveals most financial advisers are willing to advise on portfolios of £50,000 or under

Financial Advice Barometer January 2018 information

The January 2018 survey also reveals that while most savers agree that portfolios of £50,000 or less are suitable for the industry to manage, there is still a misconception among some consumers that professional financial advice is for those with more extensive portfolios.

  • 70% of advisers would advise on investment portfolios of £50,000 or less
  • Almost three quarters (71%) of Britons wouldn’t think about consulting a financial adviser unless they had £25,000 or more, but nearly 2 in 5 advisers (38%) would advise on a portfolio of £25,000 or less
  • Only 15% of under 24s currently use a financial adviser but a third (33%) said they would be likely to in the future
  • Market volatility drives increase in popularity of cash deposit products
  • Advisers and consumers align on security as top priority for savings, with NS&I 100% guarantee featuring strongly

While only 6% of financial advisers tend to advise on portfolios of £500,000 or more, some 14% of consumers would not think to use a financial adviser with anything less than that sum of money. NS&I’s research also shows that under 24s (15% of respondents) are currently consulting a financial adviser, but a third (33%) would do so in the future.

While the clear majority of advisers would advise on portfolios of £50,000 or under, opinion is split over their role in actively supporting a savings culture, with 49% of respondents saying yes, there is more advisers can do to support a stronger savings culture – NS&I’s strategic purpose – and 51% saying no, there isn’t.

NS&I's Purpose, Mission and Values (LINK TBC)

Suggestions for how financial advisers could support a stronger savings culture focused on providing financial education and talking more about cash based savings. Meanwhile, the comments from those responding that there isn’t more to do to support a stronger savings culture, cited the business element of financial advice and the unwillingness of consumers to pay.

Market volatility leads to highest recorded percentage of cash deposits in easy access products and shorter fixed-term products

The January 2018 survey recorded the highest score for advisers’ clients investing cash deposits in easy access products, at 59%, since the Financial Advice Barometer began in February 2016. Conversely, the latest survey recorded a relatively low percentage of cash deposits being invested in fixed-term products, at 31% (the same figure as in October 2017), although these figures have remained steady since the survey began. Similarly, around half (52%) of British consumers keep over 90% of their savings in easy access products.

Financial Advice Barometer February 2016 (LINK TBC - NEWS ARTICLE when live)

Also reaching a high point in the January 2018 survey was the proportion of advisers that recommend that their clients hold a larger percentage of their investment portfolio in cash. 32% of respondents said that they recommend that their clients should hold 20% in cash, up from 23% in October 2017. Conversely, 27% of respondents in January said that they recommend that their clients should hold only 5% in cash, down from 33% in October. This suggests that advisers are recommending that a greater proportion of clients’ portfolios should be invested in cash deposits.

October 2017 Financial Advice Barometer results (LINK TBC)

When advising on fixed-term cash deposits, shorter terms are most popular now, with 57% of advisers currently recommending 1-year terms, an eight percentage point increase since October 2017. A majority of advisers would therefore recommend 1-year term products over any other term.

Is NS&I the answer for those concerned about the security of their portfolios?

It is not just easy access products that are becoming more popular. There has been an increase in the percentage of advisers responding to the survey who indicate that the FSCS limit of £85,000 has led them to advise clients to invest more money in NS&I products than they might otherwise do.

FSCS limit increases to £85,000

This increase, up from 34% of respondents in October 2017 to 51% of respondents in January 2018, has coincided with a 15 percentage point drop in advisers recommending clients to spread their cash deposit savings around multiple UK financial providers (from 75% in October 2017 to 60% in January 2018). Overall, there has been a growth in advisers recommending NS&I products based on its 100% security guarantee since the survey began in February 2016, when a figure of only 31% was recorded in answer to this question.

Likewise, consumers’ top priority for their savings is security, with 41% of British savers choosing security as their main priority over achieving moderate returns, achieving high returns, and achieving consistent returns. The feeling is mutual among the top and bottom savings brackets, with 41% of those with less than £1,000 saved and 42% of those with £100,000 or more saved, agreeing that security is paramount to their portfolio.

Andrew Pike, Head of Intermediary Relationships at NS&I, said:

“Many see the amount of savings they have as a barrier when it comes to seeking professional financial advice, but it is encouraging that advisers are more than happy to advise on £50,000 or less, with almost 40% saying that they would advise on £25,000 or less.

“Also, it’s very interesting to see the trend towards advisers recommending to their clients that they invest more of their money in cash to ensure ongoing security and liquidity.”

Notes to Editors<

  1. 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.
  2. For the January 2018 survey, 877 people opened the email and 78 people responded to the survey, giving a 9% response rate.
  3. NS&I’s Financial Advice Barometer asks a series of financial advice market tracker questions 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. Each quarter, a one-off topical question is also asked.
  4. The consumer research section was conducted by Populus among 2,051 British adults aged 16+ between 12 and 14 January 2018. The sample has been weighted to represent the adult population of Britain.
  5. NS&I is one of the largest savings organisations in the UK, offering a range of savings and investments to 25 million customers. All products offer 100% capital security, because NS&I is backed by HM Treasury.
  6. For further information, please contact the NS&I media team.