The Iress Financial Readiness Index (FRI) has revealed that despite many people feeling confident about their finances, far fewer are properly prepared. With an overall score of 44.2 out of 100, the UK sits in the ‘financially uncertain’ category, yet almost half (46%) of respondents believe they are financially secure.
Iress says that this disconnect between confidence and reality shows that the advice gap remains a significant challenge for the UK advice sector and points to the vital role played by advisers in helping clients better understand their financial position.
The research shows that advice remains underused at critical financial milestones. Fewer than half (46%) of people who have owned a home sought professional advice when buying, while only around a third (32%) spoke to an adviser when arranging private protection cover. Despite retirement planning being a core focus for the profession, just 11% of those working or studying have taken retirement advice so far.
Nevertheless, more than a third (35%) of respondents who have not taken financial advice believe they would benefit from it, indicating the opportunities for a substantial market to explore.
Younger adults show the greatest openness to advice, with 50% of those aged 18 to 35 saying they would benefit from it, nearly double the proportion of those aged over 55. However, engagement typically happens much later in life, with many consumers delaying advice until their fifties.
The industry also faces a lack of engagement from groups that are often the lowest in confidence about their financial position. Among respondents who feel very confident in their financial position, 40% believe advice would be beneficial. This falls to 25% among those with the lowest confidence, suggesting advisers may need to rethink how they communicate value to more disengaged groups.
Major life events such as buying a home, having children or getting married continue to act as triggers for financial decisions, particularly around protection. However, even at these moments, there is an opportunity for greater adviser involvement to improve outcomes for the population.
For example, those who consulted an adviser for their mortgage and protection when buying a home are significantly more likely to have an appropriate mortgage and hold appropriate protection cover than the wider population.
Only a third of people seek advice when arranging protection, despite evidence that advice improves outcomes. Engagement for advice is higher only for more complex products, such as income protection (48%) and critical illness cover (44%), suggesting a perceived lack of awareness among clients about how advice can improve outcomes across the wider value chain.
Across all areas of financial planning, the research shows a consistent pattern of delayed engagement. Many people will reach key milestones such as homeownership or retirement later than expected, and underestimate what is required to achieve those goals.
More than two-fifths (43%) of those planning to seek retirement advice intend to do so after the age of 50, by which point options to improve outcomes are more limited. The data also shows that a significant proportion of over-55s have relatively low levels of retirement savings, reinforcing the consequences of late engagement.
Alistair Morgan, chief executive officer at Iress UK, said: "While many people feel confident about their finances, the Index shows that confidence does not always reflect reality. For advisers, this validates the opportunity to engage earlier, help clients build stronger financial foundations and improve long-term outcomes.
"The challenge for the industry is not just access to advice, but timing. Supporting clients at the right moment, particularly around key life events, can make a meaningful difference to their financial resilience."
