How can industry improve financial advice for disabled… and access to money?

City Hive survey finds having the money to invest or save is biggest barrier

Investment firms have the opportunity to “bridge the gap” between disabled people’s access to finance by offering “proactive support to IFAs”, a City Hive study has found.

Disabled people in the UK make up 21% of the working population and more than 40% of pension age. These numbers will rise due to changing demographics, longer lives but also increasing chronic conditions, said City Hive. However, disabled people are twice as likely as non-disabled people to believe investing is not for them, and a complexity of life circumstances and needs means access to finance can often be trickier.

In research published today, entitled Financial Inclusion & Disability: Rebuilding Trust in Financial Services, City Hive, supported by White Marble Consulting, Axa Investment Managers, JP Morgan Asset Management, Schroders, Vontobel Asset Management and a consortium of retail and institutional asset managers, surveyed 1,000 UK adults, 506 of whom were disabled, as well as conducting a literature review and research in 2022.

The report found IFAs were the top source of advice for disabled respondents, with nine out of 10 of the 30% who reached out to them happy with the outcome.

“Investment firms should examine how they can offer proactive support to IFAs, including how to explain products and services through different lenses,” the report said.

“IFAs can provide tailored advice to cater to the complex range of needs that disabled individuals can face. This will help bridge the gap between individuals and how they access the right products and services.”

For example, the report suggested firms should seek to create opportunities for wider industry collaboration, in particular to bring in life companies that are closer to understanding day-to-day challenges and costs. Those firms with life companies within their group of companies should leverage their insights.

One respondent to the survey also said lower investment thresholds would be helpful.

“Investment firms can respond to the opportunity to cultivate more welcoming conditions for disabled people to invest and build sustainable wealth,” said Mandy Kirby, chief strategist at City Hive.

No money to invest

However, no amount of increased access or understanding of finance can improve what City Hive found to be an issue across the ability spectrum: having money.

“When we asked what would help them save and invest their money about four in 10 reported that actually having the money to do so would be the most helpful. This was the case for both those who were disabled and those who were not,” the report said.

“Some people, especially those on means-tested benefits, also face additional barriers in the form of restrictions on how much capital they can have before benefits required for daily living are reduced or removed completely. This means saving or investing becomes effectively impossible outside private pension savings or trusts.”

Disabled people do face this barrier more often than non-disabled people, with around one in 10 disabled people reporting that benefit rules prevented them from saving or investing.

Kathryn Knowles, managing director of Cura Insurance, commented: “There are very few financial advisers who have knowledge and experience with navigating the benefits system let alone combined with investing.”

As the cost-of-living crisis in the UK continues, almost half of disabled and non-disabled people surveyed expected their financial situation to be worse in two years’ time.

Bev Shah, CEO of City Hive and ESG Clarity EU Committee member, concluded: “If the asset and investment management industry want to tackle the inequalities faced by those with disabilities, we need to move beyond awareness and take action to address the imbalances in our financial system.”