A recent study carried out by Moneybox unveiled a significant reliance on family and friends for financial guidance within the UK population. The study revealed that 29% of respondents learned about financial management from their parents, while 11% sought advice from friends. Moneybox expressed concern that these sources of advice may not always be reliable or well-informed, potentially impacting the financial health and prospects of individuals in the UK.
Interestingly, a mere 8% of the population sought the counsel of a professional financial adviser, despite evidence demonstrating that doing so can markedly increase one’s net worth. Moneybox’s research suggests that those who sought professional advice had an average net worth about £68,000 higher than those who did not, regardless of income levels.
The study also highlighted a significant portion of the population struggling to grasp personal finance terminology, with 16% of respondents admitting to this challenge. Additionally, 17% disclosed feeling overwhelmed by the concept of learning about personal finance. As a result, a new trend known as ‘finfluencers’ has emerged, with online communities aiming to educate and inform individuals about financial matters.
Brian Byrnes, Head of Personal Finance at Moneybox, expressed concern about the lack of financial education in the UK. He pointed out that the current system has left many individuals to navigate their financial planning through trial and error, resulting in persistently low levels of financial resilience across the population. This lack of financial acumen has contributed to social issues such as the gender pension gap and the widening wealth gap.
Despite recent criticism of ‘finfluencers’ and online content creators by the Financial Conduct Authority (FCA), Brian Byrnes believes that they deserve more recognition for their role in encouraging people to engage with financial topics. He acknowledged that while the regulation in this space is catching up, finfluencers and content creators will now have better support to guide their audiences with greater clarity.
Brian Byrnes emphasized the need for the financial industry to take responsibility in bridging the advice gap and providing more accessible and reliable sources of financial education. He stressed the importance of improving financial literacy, both in schools and throughout adult life, to empower individuals to make informed decisions about their finances.
The implications of relying on poor financial advice can have far-reaching consequences, and it is clear that there is a pressing need for improved financial education and accessible, trustworthy sources of advice. It is essential for individuals to be equipped with the knowledge and resources to effectively manage their finances and plan for the future, and this responsibility falls not only on individuals themselves, but also on the financial industry and regulatory bodies to ensure that everyone has the opportunity to achieve financial security and resilience.