Moneybox: How much does bad advice cost?

According to Moneybox, people who solely rely on their family and friends for financial advice are, on average, £42k worse off – regardless of income.

Related topics:  Moneybox,  Financial Education
Tabitha Lambie | Editor, Protection Reporter
22nd May 2024
"Looking to the future, it's imperative that the industry does more to close the financial advice gap."
- Brian Byrnes, Head of Personal Finance at Moneybox

Of those surveyed (4,055), 29% of respondents learnt how to manage finances through their parents, while 11% relied on friends for advice. Given that family and friends may have also received a ‘hand-me-down’ financial education, Moneybox is concerned about the impact these decisions have had on the UK’s financial health and prospects.

Only 8% of the UK population opted to pay an adviser to assist with their financial planning. This will have resulted in higher net worth (approximately £68k more) than those that didn’t – regardless of income.

Furthermore, Moneybox’s research found that 16% of respondents struggle to understand personal finance jargon, while 17% find learning about personal finance overwhelming. This confusion has fuelled the ‘finfluencer’ trend, building online communities to help educate people about their finances.

“Financial education, both in school and in later life, has been severely lacking in the UK which means that most people have been left to figure out how to manage their money and plan for the future through trial and error,” said Brian Byrnes, Head of Personal Finance at Moneybox.

He believes the system is “far from ideal” and has contributed to persistently low levels of financial resilience amongst the UK population. This has fuelled social issues such as the gender pension gap and the ever-widening wealth gap.

Last year, The Exeter expressed concern about the lack of financial education in the UK with almost twice as many employees cancelling insurance policies compared to 2022. At the time, Emma Astley, Managing Director at CoverMyBubble Ltd, said, “Nobody will dispute that 2023 has been a difficult year for the personal finances in the UK, something that The Exeter’s findings make crystal clear […] but it’s particularly worrying to see this translate to an increase in policy cancellation.”

“Customers can have inflated expectations of cost – and are shocked to hear how cheap appropriate cover is. Education is essential and rushed sales must be avoided,” she warned.

READ MORE: The Exeter’s Health & Financial Fears Report 2023: Discussing the NHS, sick pay, and financial education

Despite recent criticism of finfluencers with the Financial Conduct Authority (FCA) currently prosecuting several celebrity influencers for alleged financial promotion breaches, Brian feels that finfluencers “don’t get the credit they deserve for the role they have played in helping encourage more people to engage with learning about financial topics more regularly.”

“Now that regulation is catching up in this space, finfluencers and content creators across the industry will be better supported to guide their audiences with greater clarity,” he added.

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