The Urgent Need for Trust and Transparency in Financial Services
Steve Conley
Founder of the Academy of Life Planning & Planning My Life | Championing Values-Driven Financial Planning | Mentor to Independent Planners | Author and Advocate for Meaningful Change
By Steve Conley, Founder of the Academy of Life Planning
Recent research by LiveMore has laid bare a concerning reality: nearly 59% of people between the ages of 50 and 79 mistrust financial services providers. This statistic is not just a number; it represents individuals whose lives are being negatively impacted by a lack of trust in an industry that should be safeguarding their financial well-being.
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The Wall Between Advice and Product
One of the key issues fuelling this mistrust is the blurred line between financial advice and financial products. Too often, advisers are remunerated by the very products they recommend, creating a conflict of interest that undermines the integrity of their advice. It's high time we establish a clear wall between advice and product, ensuring that advisers are not financially incentivised to push specific products.
Expanding the Scope of Non-Intermediating Financial Planners
While the investment market has seen some progress in the form of non-intermediating financial planners, the mortgage and insurance markets lag behind. These sectors are equally in need of advisers who are not financial intermediaries. By expanding the scope of non-intermediating financial planning, we can begin to rebuild trust across all facets of the financial services industry.
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Gender Disparity in Trust
The LiveMore study also highlighted a gender disparity, revealing that 61% of women are mistrustful of financial services compared to 57% of men. This gap underscores the need for a more inclusive approach to financial planning, one that addresses the unique concerns and challenges faced by different demographics.
Regulatory Shortcomings
The Financial Conduct Authority's critical review of lifetime mortgage sales further tarnishes the industry's reputation. With 400 instances where promotions had to be amended or removed, it's clear that regulatory bodies must step up their oversight and enforcement actions.
The Way Forward
Consumer duty guidelines are not just a regulatory requirement; they are a moral imperative. Full affordability assessments must be the norm, not the exception. As LiveMore CEO Leon Diamond rightly points out, reducing the 59% mistrust statistic is crucial for the future.
In conclusion, the financial services industry has a long way to go in regaining consumer trust. By separating advice from product sales and expanding the role of non-intermediating financial planners, we can take significant steps towards a more transparent and trustworthy financial future.