But GfK’s latest research, through its database of 60,000 active investors, shows that a huge proportion of those who previously paid for advice are now disaffected. Of those planning further investment within the next 12 months, one in three now says they would not pay for advice again.
The proportion is higher among those with smaller sums invested, suggesting that cost is the deterrent.
Among consumers who have less than £50,000 invested, almost 40pc say they will never return to their financial adviser. But even when the sums rise to £100,000 or more, one in five consumers who previously paid for advice now says they would “never consider” doing so again.
When GfK applied its findings to the wider population who have previously sought advice, it reckoned that as many as 340,000 would now turn their backs on their advisers and make do on their own.
To some extent this trend is being borne out by brokers, fund supermarkets and other firms which are positioning themselves deliberately to attract a wave of DIY investors. These include established companies such as Hargreaves Lansdown and Alliance Trust Savings, which sell popular mainstream funds at low cost, as well as new firms such as Nutmeg.com, which operate entirely new models. With Nutmeg, for example, consumers indicate their investment objectives and risk tolerance as they sign up online. This generates a low-cost portfolio that can be held inside an Isa.
Other firms that have traditionally offered advice are expanding low-cost, non-advice divisions for DIY investors.
City of London stockbroker Charles Stanley, for example, last year launched Charles Stanley Direct, whose charges are so low that it is typically the cheapest means of investing in popular funds offered by big providers such as M & G, Invesco or Jupiter. Investors pay Charles Stanley a flat 0.25pc, which is clearly separate from the management charge they pay the fund provider.
Richard Mills typifies the private investor who has become disenchanted with financial advice. An IT consultant in his late fifties, Mr Mills, who lives in Buckinghamshire, first saw an independent financial adviser 10 years ago. By then he had a large number of pension pots accrued through past employment, as well as Isas and other ad hoc investments.
The adviser was helpful, drawing all the pensions together into a single account and selecting about a dozen funds in which the money was invested. The investments were managed through an account with insurer Winterthur Life.
“This initial tidy-up was useful and needed doing,” Mr Mills said. “But there was little follow-up. I was acutely aware that I was paying on-going commission to the adviser and not really getting anything for it. I would occasionally call up and ask whether we needed a review, but it didn’t happen. The penny finally dropped about how this commission system worked.”
Under the old regime, as Mr Mills realised, advisers typically took two forms of commission. They took part of a client’s upfront investment at the outset – say 3pc. And then, for every year thereafter, they collected ongoing “trail” commission, typically 0.5pc of the money invested. They took this money whether or not they did any further work.
A year ago Mr Mills fell ill. During his recovery he “cleared out” his financial affairs. That meant moving them away from his adviser and the Winterthur account and putting everything – pension plans, Isas and other investments, including his wife’s – with Charles Stanley Direct.
“My funds hadn’t really been looked at for many years,” he said. “And I was aware I could save if I went to a broker where there was no commission. It took a bit of time to understand and I looked at a number of providers. Now I have everything in one place. And I know exactly how much I’m paying.
“That would be my advice to other investors: keep investments together and pick a broker where costs are low. Having got to that stage you can read the papers, read about investment online, and act on the information. In the end it’s my own pension, not my financial adviser’s. I think everybody should take an interest in their own pensions, really.”
Figures last week from unbiased.co.uk, the website listing professional advisers, disclosed the latest costs of commonly sought financial advice. An initial financial review and report costs £500, it said. Advice on where to put £200-a-month pension contributions would also cost £500. Help setting up a £10,000 Isa would cost £400, whereas “advice for investment strategy for a £50,000 inheritance” would cost £1,500. Advice on how to use a £100,000 pension fund to buy an annuity and withdraw a lump sum would cost £1,500.
These costs, which to many seem high, are at least clear, said unbiased’s chief executive, Karen Barrett. She added: “There has never been a more level playing field, with all advice providers giving information about services and costs in a more easily comparable format. I expect advisers to continue to refine costs and services in the next 12 months and we may see a decrease in charges for specific services.”