The Money Advice Service (MAS) is partnering with organisations to build evidence on how to use emotional engagement to improve financial capability, and is asking advisers to cooperate.
Helen White (pictured), head of financial capability and strategic alliances, said the advice community should get involved in helping build this evidence base because it is in their long-term business interests.
White argued if people are engaged and thereby more confident in managing their money day-to-day they will be more likely to ultimately seek advice.
White said: ‘Our evidence tells us that people can’t start engaging with preparing for and managing life events until you have got them sorted with managing their income and outgoings.
‘[Advisers] need to start working with us to build evidence on how you emotionally engage people in wanting to and feeling confident planning for the future and then what kind of tools and methods are effective in driving the behaviours'.
MAS launched a 10-year financial capability strategy in May that involves building an evidence base of what works for financial capability and providing the resources for people to share that evidence.
In June, MAS announced a £7 million fund to support partnerships with organisations to build evidence of what interventions work and which do not when it comes to getting people to manage their money better.
White said her experience of working with financial services professionals at the Association of British Insurers revealed that some seemed to understand the importnacne of emotional engagement while others were not on board.
‘If you can get advisers and advice professionals to understand why it is so important to engage people emotionally and help them to start thinking about ways to do that- that’s a useful process.
‘We are happy to help the industry start thinking about these things and how they might put them in to practice,’ said White.
Director of Towcester-based Fortitude Financial Planning, Neil Bailey, agrees with MAS’s aim to raise the profile of emotional engagement in advice.
‘I absolutely agree… That’s why the lifestyle financial planning process provides a context for financial advice.
‘It’s asking the right questions that is where the emotional engagement comes in. Asking people what their objectives are. You are listening to their answers rather than trying to flog them stuff,’ said Bailey.
Chris Hannant, director general of the Association of Professional Advisers (Apfa), also sees the goal as valuable but said there are practical obstacles MAS will need to consider when looking to implement behaviour changes in this are.
‘How [helping people identify life goals] is transferable to a more mass community basis is where it gets trickier,’ said Hannant.
MAS will host a Financial Capability week from 14-20 November which will bring together over 200 organisations to discuss best practice in this area.
The chair of the MAS Financial Capability Board, Andy Briscoe appealed to finance professionals to play a part in the event.
He said: 'I would like to encourage all organisations who are interested in helping drive up financial capability to get involved in the week. Share what you know, take part in our social media debates and even arrange events yourselves with our help,' he said.