Financial advice remains underused at critical financial milestones, across mortgages, protection and retirement.
The findings from the Iress Financial Readiness Index show less than half (46%) of people who have owned a home sought professional advice when buying, while only a third (32%) spoke to an adviser when arranging private protection cover.
Furthermore, just 11% of those working or studying have taken retirement advice so far.
However, more than a third (35%) of respondents who have not taken financial advice believe they would benefit from it, according to the fintech firm.
The research found that while many people feel confident about their finances, far fewer are properly prepared, creating a significant challenge for the UK advice sector.
With an overall score of 44.2 out of 100, the UK sits in the ‘financially uncertain’ category. Yet, almost half (46%) of respondents believe they are financially secure.
Iress said the disconnect between confidence and reality shows that the advice gap remains a significant challenge for the UK advice sector and points to the vital role played by advisers in helping clients better understand their financial position.
Younger adults show the greatest openness to advice, with 50% of those aged 18 to 35 saying they would benefit from it, nearly double the proportion of those aged over 55. However, engagement typically happens much later in life, with many consumers delaying advice until their 50s.
The industry also faces a lack of engagement from groups that are often the lowest in confidence about their financial position. Among respondents who feel very confident in their financial position, 40% believe advice would be beneficial, but this falls to 25% among those with lowest confidence.
Iress said that across all areas of financial planning, its research shows a consistent pattern of delayed engagement. Many people will reach key milestones such as home ownership or retirement later than expected and underestimate what is required to achieve those goals.
More than two-fifths (43%) of those planning to seek retirement advice intend to do so after the age of 50, by which point options to improve outcomes are more limited. The data also shows that a significant proportion of over-55s have relatively low levels of retirement savings, reinforcing the consequences of late engagement.
Only a third of people seek advice when arranging protection, despite clear evidence that advice improves outcomes.
Engagement for advice is only higher for more complex products such as income protection (48%) and critical illness cover (44%), suggesting a perceived lack of awareness from clients on how advice can improve outcomes across the wider value chain.
Alistair Morgan, UK chief executive officer at Iress, said: “While many people feel confident about their finances, the Index shows that confidence does not always reflect reality. For advisers, this validates the opportunity to engage earlier, help clients build stronger financial foundations and improve long-term outcomes.”
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