Closing the Advice Gap: Why Millions Remain Stuck in Cash

The FCA’s recent consultation (CP25/17) and the findings from its Financial Lives Survey 2024 highlight persistent challenges in how UK adults manage their pensions and investments. The evidence confirms that millions of people continue to hold investible assets in cash, leaving them exposed to inflationary pressures and at risk of poorer long-term outcomes.

Consumers holding cash, not investments

The Financial Lives data shows that 61% of adults with £10,000 or more in investible assets held all, or the majority, of these assets in cash. This choice reflects a combination of low confidence, limited knowledge, and barriers to accessing regulated advice.

The FCA’s consultation further reports that 7 million adults are in this position, despite having sufficient resources to begin investing. Among them:

• 24% say they do not invest due to lack of knowledge.
• 12% feel overwhelmed by the options.
• 8% want to invest but need support to start .

These figures underline that the advice gap is not simply about affordability but about capability and accessibility.

Limited use of professional advice

Both the consultation and survey data show that only 8.6–9% of adults received regulated financial advice on pensions or investments in the year to May 2024. Most decisions are made without structured support. 59% of adults did not use any form of information, guidance or advice during this period .

Where support is sought, younger adults are turning increasingly to social media. Among those aged 18–34, 45% used social media for investment research, though only 14% relied directly on influencers, vloggers or bloggers .

Retirement preparedness and decumulation risks

The FCA has highlighted structural risks at both the accumulation and decumulation stages:

• Over a third of the working-age population (38%) are under-saving for retirement, according to the Department for Work and Pensions, referenced in CP25/17 .
• Among defined contribution pension holders aged 45+, 75% do not have a clear plan for accessing their savings or are unaware they need to make such a choice .
• At the point of decumulation, two-thirds of pension pots are accessed without advice . In many cases, withdrawal rates are unsustainable: 43% of plans with regular withdrawals draw more than 8% annually, raising the risk of rapid depletion .

These findings demonstrate why the FCA is concerned that poor decisions, inertia, or over-reliance on informal sources could undermine retirement security.

Barriers to advice

The FCA’s consultation identifies four main barriers discouraging consumers from regulated advice:

1. Cost – comprehensive advice remains unaffordable for many households.
2. Complexity – pensions and investments are perceived as difficult to understand.
3. Trust – concerns that advisers’ recommendations may be sales-driven.
4. Accessibility – digital platforms and social media have reset consumer expectations around speed and cost of support .

In response, CP25/17 proposes a new category of Targeted Support, sitting between general guidance and full regulated advice. This framework is intended to help firms provide ready-made suggestions for groups of consumers with common needs, while maintaining Consumer Duty standards .

Why this matters for advisers

For regulated firms, these findings represent both risk and opportunity. Risk, because millions remain outside the advice market, with decisions that could lead to long-term harm. Opportunity, because the FCA is signalling openness to models of support that are more scalable, cost-effective, and tailored.

Consumers are not rejecting professional input outright. Rather, they indicate that the traditional advice model often does not meet their needs. Advisers who can adapt to new frameworks and leverage technology will be well placed to serve these underserved groups.

The role of technology in meeting demand

Digital innovation has already reshaped consumer behaviour. The FCA notes that app-based investing has reduced barriers to entry, while also fuelling participation in high-risk products unsuitable for many consumers .

Against this backdrop, advisers need tools that enhance both efficiency and compliance. Automwrite was developed with this precise challenge in mind. By turning adviser notes into compliant, CIP-aligned suitability reports in minutes, Automwrite supports firms in:

• Scalability – serving more clients without compromising compliance.
• Clarity – producing reports in plain language, helping to bridge consumer knowledge gaps.
• Compliance – ensuring outputs align with FCA expectations, reducing regulatory risk.
• Efficiency – freeing advisers from administrative burden, allowing greater focus on client engagement.

Conclusion

The FCA’s latest consultation and survey results bring urgency to the advice gap debate. Millions of UK adults hold investible assets in cash, under-save for retirement, or access pensions without guidance. Demand for support is clear, but the supply of affordable, trusted, and accessible advice remains limited.

As the regulatory framework evolves to accommodate new forms of targeted support, firms must adapt. By adopting solutions like Automwrite, advisers can deliver compliant outputs at scale, broaden their reach, and help clients move from cash inertia to sustainable financial futures.

Frequently Asked Questions

How big is the UK advice gap in 2024?
The FCA’s Financial Lives Survey 2024 shows that around 7 million adults with £10,000 or more in investible assets keep them entirely in cash. Only 8.6–9% of adults received regulated financial advice on pensions or investments in the 12 months to May 2024.

What is the FCA’s new Targeted Support?
In CP25/17, the FCA proposes a new category of Targeted Support. This would let firms provide ready-made suggestions for groups of consumers with similar needs, sitting between general guidance and full regulated advice while remaining aligned with Consumer Duty standards.

Why do so many people avoid investing?
Barriers identified by the FCA include lack of knowledge (24%), feeling overwhelmed by choice (12%), and needing help to get started (8%). Trust, cost, and accessibility also discourage many from seeking advice, leaving them reliant on cash savings despite inflation risks.

How can AI support financial advisers?
Artificial intelligence cannot give regulated advice, but it can improve efficiency. Tools like Automwrite generate CIP-aligned, compliant suitability reports in minutes, helping advisers scale their service, reduce administration, and focus more on guiding clients in line with FCA expectations.