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Desperately seeking advice

Posted in: Finance Last updated: 21 Jun 2012

As the author Erica Jong said, "advice is what we ask for when we already know the answer but wish we didn't". I'm pretty certain she wasn't talking about financial advice, but knowing when to trust one's instinct and when to know it's time to call in the experts is particularly pertinent where money is concerned.

Who do we trust for advice

There's nothing like being told by a financial advisor that you're not saving enough for your pension, when you know it already but are struggling to fund your meagre monthly payments as it is.

Whether we want to hear the advice or not, who do we most trust to give it to us? Personal finances can be simple or complicated, often depending on how much money you have to worry about. But in this age of low interest rates, scarce mortgage deals and low to nonexistent pay rises, making the most of your savings is even more vital. Take your eye off the ball and your nest egg could be languishing in an account barely earning pennies in interest.

So I'd imagined that people would be seeking expert advice more than ever in this economic climate. However, research carried out by Mintel* shows that UK consumers are quite cynical when it comes to financial advisors, and only 12% of adults said they turned to them for financial advice or guidance.

In fact, Mintel's research threw up some really interesting findings. Almost a third of people (31%) said they used their bank or building society's staff and another third (33%) used websites and online forums. There's no doubt that the easy availability of quality online financial information has helped people become informed and engaged in this area.

While people may feel cynical about advisors who are independent of any financial institution, they would appear to be happy to talk to their bank or building society, which will only be offering their own organisation's specific products. Perhaps the fact that this is so transparent – or maybe just because it's easiest – is what draws people.

"It comes down less to who has the most knowledge and more about who we trust most."

Word of mouth counts

The really surprising finding from Mintel's report was that 43% of those asked turn to their partner, family or friends for advice in preference over any others. So even in the area of finance, it comes down less to who has the most knowledge and more about who we trust most. Every financial institution in the country should take note: word of mouth and recommendation is always going to count for a lot.

Of course there are varying factors. For instance, how much money someone has and how old they are influences who they seek advice from. The older and more affluent a person, the more likely they are to pay for expert financial advice.  Bizarrely, beyond the use of helplines and consumer organisations, the more worried someone is about their money, the less likely they are to seek financial advice.

And finally, what comes out crystal clear from this consumer research is that in 'Austerity Britain' we have all become far more sensible with regards to our money. Almost one in eight people said their financial priority was to keep track of financial commitments and to keep adding to savings, and that saving is more likely to focus on the short-term - rainy day savings - rather than long-term savings.

So maybe there is still work to be done, be it by IFAs, banks and building societies or personal finance advice websites, to encourage people to see saving for the long term as a priority too.

*Research carried out by Mintel April 2012

Note: Whilst we take care to ensure Hub content is accurate at the time of publication, individual circumstances can differ so please don’t rely on it when making financial decisions. OneFamily do not provide advice so it may be worth speaking to an independent financial advisor about your own circumstances.