At the end of last year, the FCA surveyed 233 firms active in providing retail investment advice, these included; financial advisers, banks and life insurance companies. The FCA’s questions focussed on the following specific retail investment areas: pension accumulation, retirement income, investments and other advice areas, such as protection products and mortgages.

The FCA has recently issued a report presenting its findings from the survey. The report, published on 28 April 2016, was used to gain a better understanding about the profile of the customers of advice firms, the barriers that firms face in expanding the provision of advice to the mass market, the use of technology in the advice process, and the advice firms’ views on the future of the advice market.

Some of the key findings resulting from the survey are:

  • Most firms use face-to-face meetings or telephone conversations as the primary channel for delivering advice to consumers.
  • The majority of firms (67% or more) reported that they tend to use technology to a significant degree throughout the advice process, primarily for research, analysis and financial planning, risk profiling, customer data management and reporting.
  • Customer-facing technology, such as tools to aid decision-making, were used to a significant degree by 15% of firms.
  • 29% of firms said they expected to increase their use of platforms, and 32% of firms expected to grow their number of advisers over the next year.
  • The majority of firms planned to use more technology, particularly in customer communications and to increase efficiency and reduce the costs of the advice process.
  • A relatively small proportion of firms, 11% or less, expected that, over the next year they would increase their mass-market, low-cost advice proposition or the provision of generic advice.
  • 72% of firms said that customers’ preference for personal interaction with an adviser was a ‘very important’ or ‘important’ barrier to providing automated or technology-supported advice.  Generally, the larger firms viewed it as less of a barrier than smaller firms. 19% or less reported a lack of customer trust in automated propositions, lack of customer ability to access and use online tools, or customer acquisition costs for automated advice being very important barriers.
  • The cost of technology and regulatory obligations and implications were also stated as an important barrier.

The results of the survey were used to inform the financial advice market review (FAMR) and its recommendations.