Investigating what consumers want and need with their personal finances

What consumers want and need | Nuthawut - stock.adobe.com

When you’re a body as big as the Financial Conduct Authority (FCA), with a substantial research budget and a statutory remit to protect consumers, it makes sense to investigate exactly what those consumers need and want, and how they live their lives.

Which is why, since 2017, the FCA has been conducting its Financial Lives research to understand about peoples financial resilience and what barriers they face in improving their financial lives. The most recent wave was published this month.

Alison Gay | Supplied

About 18,000 people were asked for their views between February and June last year. There’s a massive amount of data, and it’s a rich source for anyone interested in the way people in the UK manage their finances.

Part of the research is a deep dive into financial advice and support. Given the focus on those in the most fragile circumstances, such as the 10 per cent who have only enough resources to support themselves for less than a week, you could be forgiven for thinking there was little spare to be had for savings and investment.

But, in fact, not far off half (43 per cent) of adults have more than £10,000 in investable assets. This figure rises to 72 per cent for retirees, and 80 per cent for the semi-retired.If you look at people with more than £10,000 to invest, more than half are keeping it all or mostly in cash. And the proportion of people doing this is rising – up from 55 per cent in 2020 to 61 per cent in 2024. That’s a lot of people with £10,000 or more who could be investing their money in the stock market.

Of course, there are plenty of reasons why cash may be exactly where their money should be – saving for a holiday or expected bill, for example. But could some of them benefit from professional financial advice to make better use of it?

The FCA thinks so and has looked at the reasons why people don’t seek it. Asking why respondents hadn’t received regulated advice over the previous year, the biggest reasons were that they didn’t feel they needed it, could get information elsewhere, or it hadn’t occurred to them. But there were also issues around access, fees and trust.

When asked if they trusted financial advisers, fewer than half said yes. But the good news for the advice profession is that when the FCA asked people who actually had a financial adviser, 85 per cent scored positively on trust ­– one of the highest scores of any sector.

There is one sector that scores very poorly indeed when it comes to trust from consumers. With the rise of artificial intelligence, it’s perhaps not surprising that when people were asked whether they would trust a fully automated service with no human interaction their suspicions were high.

Some 77 per cent of respondents said they would have no or low trust in fully automated decision making, up from 74 per cent in 2020, so perhaps the machines won’t be taking over quite yet.