Banks hit as Britons turn to internet for advice
Banks have suffered a -dramatic drop in demand for financial advice as Britons increasingly manage their money using the internet. Just 4 per cent of individuals still see their bank as their main financial adviser, down from 28 per cent in 2003.
Demand for advisory services has fallen across the board, with more than half of the 2,000 Britons surveyed saying they have no financial adviser - up from one-third five years ago, according to research by ComPeer, the wealth management -analysts.
"The internet has enabled millions of people to find out and compare financial offers from their own home or workplace, in their own time and with no adviser, no matter how well-meaning, trying to get a sale," said Alison Malton, ComPeer managing director.
"At the same time there is a lack of trust of advisers and people don't feel that they're getting added value."
The "quite remarkable" shift away from relying on the high street banks for advice was likely to be partly because of the sector's commoditisation of products and service, ComPeer said.
The growth of call centres and impersonal service meant banks had "not helped themselves".
The banks appear no more successful with high-earners - those with household incomes of £50,000-plus - where just 3 per cent regard their high street provider as their main financial adviser.
The research also suggests limited take-up of private bank and wealth management services, cited by just another 3 per cent of high earners as their main adviser. "The typical wealthy investor is self-directed and doesn't have one trusted source of advice," Ms Malton said.
The value added by advisers to investments, rather than by financial planning services that also help with tax issues, is particularly in doubt. The growing popularity of self-invested personal pensions (Sipps) has been an especially significant development in encouraging wealthy investors to take control of their own finances, she said.
Independent financial advisers have the biggest market share as main advisers, at 16 per cent of all income levels and 25 per cent of high earners.
But these figures are also slightly down from 2003.
The research was conducted in September 2007. The FSA's Retail Distribution Review is considering how to increase the professionalism of financial advisers and ways of improving access to advice.
*The proportion of consumers expecting to take out new savings, investments or borrowings in the next six months - or add to existing balances - has fallen to its lowest level since March 2002, according to a survey by GfK NOP, the market researchers.
The number of people expecting to be financially active in one of these ways has fallen from 84 per cent to 67 per cent over the past two years.
Return to internet news headlines
View Internet News Archive