The report finds that standardised definitions of advice and guidance could give consumers a better understanding of the services available to them, and equip customers with a clearer set of expectations when selecting the level of financial support they require.
Research conducted for the FAWG found that clear and consistent descriptions of advice and guidance led to increased understanding of the scope and parameters of different services.
The reports says ‘clear explanations promote a better understanding of the services available, the associated costs and implications for decision-making, and consumer rights to protection and redress. They improve consumers’ awareness of where and how to access the support they require.’
The report recommends that FCA regulated bodies are mandated to use the standardised descriptions, and that non regulated entities, such as charities, be encouraged to adopt the same language.
Old Mutual Wealth’s own research illustrates that those who take financial advice and set financial goals for retirement are likely to be enjoy a higher pension income.
“Feedback from consumers shows few have a firm grasp on the distinction between advice and guidance. While the labels themselves are not especially important, it is critical consumers receive a clear and intuitive explanation of the service they are receiving.
“This will allow consumers to make informed decisions about the level of support they need with their financial choices. The descriptors give consumers clarity about the value of a personal recommendation from an adviser, and the comparable responsibility they have for decisions taken following guidance.”
“Many people underestimate or fail to recognise the key benefits of taking advice from a qualified adviser. Ensuring they have a clear understanding of the distinction between advised and non-advised services will encourage people to look more closely at the value of advice.”