It’s time to rethink the relationship between financial inclusion, literacy and advice, says Cara Robinson is Training & Competency Supervisor at Truly Independent.
According to a study published last month, more than two thirds of British adults feel “financially included”. To be precise, the figure stands at 67.6% – compared with the 59.5% recorded in a similar survey in 2024.
The rise means the UK now ranks 10th out of the 42 countries that feature in what’s known as the Global Financial Inclusion Index. At least at first glance, this seems like an achievement worth celebrating.
But it’s not all good news. This year’s Index also reports that just 39% of British adults regard themselves as fully financially literate.
As a result, the UK is ranked only 24th out of 42 in terms of financial inclusion. The nations ahead of it include Argentina, Turkey, Ghana, Chile, Malaysia, Colombia and Indonesia.
Naturally, it’s possible that respondents’ notions of their own financial literacy might be slightly misguided or even wildly inaccurate. Maybe Britons are unduly modest or pessimistic in their assessments. Perhaps the citizens of Argentina, Turkey and the like are deluding themselves.
Even so, the message is depressingly familiar: by any reasonable standard, financial literacy in the UK is still lacking. As we all appreciate, this has worrying implications at every level.
First, limited financial literacy is likely to translate into financial exclusion. In turn, this can lead to poor decisions and what we might politely describe as weaker household balance sheets.
More broadly, there’s the issue of what the Index’s authors label “a flywheel effect”. The net impact of a more financially literate population, they say, is a more resilient, shock-proof economy that’s likely to be seen as an attractive destination for international investment.
In other words, as reflected in new plans for the school curriculum , financial literacy is hugely important both for individuals and for the national interest. We might also add, of course, that it has a significant role to play in the long-term sustainability of our own industry.
So what, if anything, is the adviser community doing to help improve it? The uncomfortable truth is that in many instances, on balance, the answer lies somewhere between “Not enough” and “Nothing”.
Beyond business as usual
In my view, the fundamental problem here is that many advisers routinely prefer clients who have already “made it”. It follows that these clients are also likely to already have a decent grasp of financial matters.
This relatively narrow focus may be understandable in many ways. Business is business, after all. But is such an approach genuinely in keeping with the objectives of a profession whose underpinning purpose is to improve the lives of others?
Arguably above all, the situation raises serious doubts about the financial wellbeing of future generations. By way of illustration, research published earlier this year suggested only 5% of the people receiving advice in the UK are aged under 30 .
The potentially baffling assortment of financial products now readily available makes this statistic particularly alarming. So does the constant threat of “advice” being provided by friends, relatives, TikTokers and other purported sources of wisdom.
For example, Truly Independent’s CEO, Andrew Goodwin, recently highlighted an online clip in which an American teenager claimed to have secured a $15,000 loan on her first car by investing in an Airbnb property to cover her debt repayments. This was billed as a quick-fire lesson in arbitrage!
The Financial Conduct Authority doubtless has such considerations in mind when promoting the idea of targeted support. Yet advisers shouldn’t unswervingly rely on the regulator to set the agenda.
Most obviously, our industry’s own efforts to enhance financial literacy would involve making advice more affordable. In tandem, crucially – and to return to where we started – they should also include making advice more inclusive.
This might entail far greater engagement with marginalised stakeholder groups. It would demand a willingness to enter into dialogue and develop a better understanding of unmet needs.
You might say all this sounds rather idealistic, if not downright fanciful. But it’s worth remembering that anything we can do to help close the advice gap is likely to benefit the adviser community itself – as well as those it aims to serve – over the long run.
Remember, too, that there are only so many conspicuously wealthy and commendably savvy clients up for grabs. Moral duty and commercial necessity alike increasingly indicate it’s time to cast the net more widely.
Main image: elisa-ventur-yjHh4JpZQT8-unsplash
