According to a new survey released earlier this week, the majority of Brits do not trust financial advisers.
My Pension Expert reported that 57% of the public say they don't trust financial advisers, based on previous bad experiences.
The survey found that nearly 1 in 5 (18%) people had lost money after following an adviser's advice in the past, with 1 in 8 having experienced this in the past 12 months.
An even higher number of those surveyed- more than a quarter (26%)- said they had felt pressured into buying financial products they did not understand by an Independent Financial Adviser (IFA).
The lack of trust in independent financial advisers is alarming – it is a wakeup call that the financial services industry cannot afford to ignoresaid Executive Chair of My Pension Expert, Andrew Megson.
The industry must act to change the public perception of financial advice. IFAs must be more transparent, use plain language, and any untoward practices have to be punished. Otherwise, Britons will only become more reluctant to seek financial advice. And in the current economically volatile climate, this could prove disastrous for people finance.
Despite the reputational damage caused by heavy-handed sales tactics and seemingly bunk advice, Mr Megson said financial advice is not 'all smoke and mirrors'. He believed people generally stand to benefit from good financial advice.
The survey also found that nearly three-quarters of Britons would be more likely to seek out financial advice if its benefits were advertised by the Financial Conduct Authority (FCA).
A report authored by My Pension Expert in response to the survey results pointed to existing FCA regulations which protect consumers, saying that better communication could help to improve things for both advisors and consumers.
Under current FCA rules, regulated advisors must reimburse their clients if their advice leads to consumers being financially worse off than they were initially.
Ultimately, it is up to the FCA and advisers themselves to work together to restore public trust. Of course, changes will take time, but it is vital that steps are taken to improve transparency within financial services and clamp down on unethical practices. Doing so will go a long way in encouraging Britons to engage with IFAs, and subsequently, protect their financial futures.reads the report.
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