PUBLIC TURNING AWAY FROM BANKS WILL SOCIETIES SURVIVE WITHOUT BANKS CASH? - January 2009

Consumer trust in banks has been “shot to pieces” and more will now flock towards independent advice, says Money Portal group chief executive Mark Lund. Lund says in the current climate the need for financial advice has never been greater as consumers look to maximise their savings returns in a low-interest-rate environment, reallocate their investments and review pension arrangements. Lund believes consumers will be more inclined to seek independent advice than visit a branch-based adviser. He says “in the past, a lot of people have taken advice from branch-based advisers in banks but I think the bond of trust with the banks is shot to pieces. I suspect there will be a bit of a backlash. “Fewer people are going to want to turn to the banks for help and the IFA sector is going to benefit from that”. Lund says that consumers are likely to take a closer interest at how their money is invested and avoid products they do not understand.

Bankhall managing director of IFA services David Golder also believes that consumer’s lack of trust in banking institutions will drive them towards IFAs. He says: “Loss of confidence in institutions is driving people to value IFAs. Consumers understand that the markets go up and down, but not the kind of changes we have seen over the past year or so. “People will become more discriminating about what they do with their finances and IFAs will be the main beneficiaries of that. “Consumers will be less likely to walk into a high street bank because it has always been there and assume that there is no cause for concern.”

Money marketing 8th January 2009