Finances for the Online Generation
When the FSA (Financial Services Authority) released its ‘Retail Distribution Review’ (RDR) at the beginning of 2013, it claimed it intended to help make independent financial advice that much easier to understand and obtain, from investment advisers who were highly qualified to help individuals avoid repeating the mistakes of earlier private investors.
Instead, according to ComPeer, the wealth management industry research specialist, the implementation of this review has resulted in an enormous number of people simply going it alone, and not paying for advice at all – to the extent that less than a third of adults in the UK now use a professional adviser, some two million less than two years ago.
Three reasons for this situation could be put forward. The most obvious is, of course, that money is tighter than it has been and many private investors are simply not willing to pay the fees; then, on the other side, many advisors are no longer interested in investors with less than, say, £20,000 to invest. Finally, legal requirements for advisors to practise are such that some 10,000 or so have been put out of business by the changes in the RDR.
This rise in so-called ‘self-directed investors’ has forced the financial companies to change the way they work and, more importantly, communicate with these people. Digital media has become the way forward and the companies that are gaining the most success with this new breed of investors are those that are willing to go totally online. iPad versions of publications and media people with thousands of twitter followers are becoming necessities instead of the novelties they used to be.
The latest trend is for financial information provided by social networking sites such as Vidivici, which provides research on investment opportunities simply by giving users a platform on which to give their unregulated personal advice and opinions. The older generation of investors may perhaps be a little sceptical about these advances, but those of the future to whom ‘living online’ is perfectly normal will consider it just that – the normal way to do things.
Perhaps the FSA did, as some suspect, intend the RDR to help reduce the number of practising professional advisors, but it’s highly unlikely they intended to push investors away from them entirely, or to kickstart the advent of the online and digital financial era quite so thoroughly.
Tim Aldiss writes on behalf of Broadgate Mainland, the financial services PR experts.