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12th September 2012

Prudential survey indicates changing UK customer choice of advice approach

Prudential research shows that 25% people would be interested in an online or telephone financial advice service if it reduced costs.
The research also shows that one in five are more willing to pay for financial advice now than they were before the global financial crisis.
Two out of five (39%) people would be willing to complete online fact-finds before meeting with an adviser if that would reduce the cost of advice, according to independent research from Prudential.
The UK nationwide research was conducted to gauge people's attitudes to potential new business models for financial advice, ahead of the introduction of the Financial Services Authority's Retail Distribution Review (RDR) from 1st January 2013.
The research shows growing support for alternatives to traditional face-to-face meetings, with 25% saying they would be willing to receive advice online or over the phone if that meant lower charges. Around 11% would be interested in receiving advice either on the phone or online, while 10% would want an online-only service and 4% phone-only.
Support for remote meetings with an adviser is stronger among the younger generation, with 39% of 18 to 34-year-olds saying they would be happy to receive financial advice on the phone or online or through a combination of phone and online, compared to 23% of 35 to 54-year-olds. The support reduces to just 15% among those aged 55 plus.
Russell Warwick, Prudential's distribution change director, said "Giving advice over the phone or online is a logical progression for advisers, and reflects the need to meet changing customer demand. We don't believe that an 'all or nothing' approach is set to emerge but we do expect firms to start integrating non face-to-face aspects of client servicing into their models over time, as clients become more comfortable about receiving advice remotely.
"Providing these services can be run in a way that is cheaper than the face-to-face approach, it should free up advisers' time, making their businesses more efficient and enabling them to focus on securing new clients. Conducting annual reviews by phone, for example, would cut travel time which, when added up for all clients, could amount to hundreds of hours over the course of a year."
The Prudential research shows that 47% of people would expect the costs for an online or phone advice service to be at least half as much as a traditional face-to-face service.
The research also shows that 18% of people are more willing to pay for financial advice now than they were before the global financial crisis. This is a result of people being more concerned about their future finances and how current market volatility will impact their investments and financial future, as well as trusting their own judgement less when making financial decisions.