Can it be a coincidence that UK families are on course to accrue the highest levels of unsecured debt ever witnessed as of 2016, at the same time as more than half of British adults admit to having never accessed financial advice?
The worrying headline news, according to figures from accountancy firm Pricewaterhouse Coopers (PwC), is that UK families will be saddled with an average of £10,000 of unsecured debt by 2016. These unprecedented five figure levels of debt included credit cards, personal loans and student loans – but excluded mortgages – as unsecured borrowing was up by nine per cent (£19.7 billion) last year.
One obvious culprit for the significant surge of debt is the rising cost of higher education, with nearly 50 per cent of the increase amounting from student loans. Nearly a quarter of debt (22%) was at the hands of credit cards and the rest came from other bank borrowing. The Bank of England’s most recent reports estimated the current average level of UK householder debt to be closer to £8,000.
Bridging the ‘advice gap’
This worrying spiral of debt comes amid separate reports that suggest the majority of British adults are facing an ‘advice gap’ by failing to access guidance from financial advisers. The new 2015 Value of Advice, from unbiased.co.uk and MetLife, reveals that 58 per cent of adults have never taken professional advice and that those who have are often seeking the wrong advice.
According to unbiased.co.uk, consumers in their 30s (52%) are the most likely to have sought advice. Whereas more than one in four (27%) twenty-somethings who haven’t yet sought advice are planning to do so in the future. Contrast this with the over-60s who, despite being the nearest to retirement, are the least likely demographic to have ever accessed financial advice (36%).
Professional financial advisers were also asked to rank the most important areas that consumers should be seeking advice about. Retirement matters (93%) topped the poll, followed by inheritance tax (IHT) and other later life issues, like critical illness cover and long term care. However, surveyed Britons were most likely to seek advice about mortgages (14%) and life insurance (13%). Only twelve per cent had taken advice on retirement and a five per cent on IHT.
Acumen’s account on matters
Acumen Managing Director, Angela Maher, said: “It is startling to see PwC’s figures of rising UK household debt. When measured against a climate of insufficient numbers of people seeking out independent financial advice, perhaps it is not such a surprise however.
“Our message to consumers is that the advice of an IFA can help you to save money in the longer term. Really, we would like to see more consumers coming forward to discuss their financial planning with us or other IFAs.
We are right up to date with the current legislation and the very best financial services available. So we know exactly what it takes to look after your assets wisely – retirement could easily be a third of your total lifespan so it’s essential to get the planning right.