Financial services is an "overly complex" area, but one that many more people could benefit from, says Mat Megens.
The co-founder of money management app Hyperjar says regulated financial advice could benefit "most" people and help with their medium to longer-term planning, as well as debt reduction.
But one area that is particularly underserved and could have the biggest impact is people’s spending, he says.
In a Q&A with FTAdviser Megens explains where people are being hit the most by the rising cost of living and the role advisers play in helping people through it.
FTA: When it comes to managing the cost of living, where do you see people struggling the most?
MM: The hardest thing is when the cost of necessities like groceries, utilities and rent increase faster than our income.
For those who’ve had to renegotiate mortgages it’s been a shock to the system, having to find hundreds of pounds a month extra.
Our customers’ shopping habits have definitely shifted. So for example, we’ve seen a trend away from high and mid-market supermarkets to Aldi and Lidl, with more frequent but lower basket spends.
And we’ve seen a big increase in use of our discounts and cashback rewards as people need and see the benefits of getting more for their everyday spending.
FTA: Is there enough help out there for the average earner?
MM: It’s complicated. Many would argue that inflation is exacerbated by too much government support. However, sometimes competitive forces don’t work efficiently enough to keep prices fair.
If governments can monitor those dynamics and allow consumers to have visibility on costs of services and allow easy switching it can make a big difference.
An important part of Hyperjar’s mission is to highlight the importance of spending – by far the biggest ‘asset class’ for most people. The average person in the UK spends more than £1.2mn in their lifetime, so managing that spending well is critical to our financial position.
FTA: What is the easiest way to reduce regular expenditure?
MM: There are simple things most people can do that can have a huge impact:
- Look at monthly bank statements and check for any unwanted, repeated or unused subscriptions then cancel them.
- Check your supermarket spend and eliminate waste.
- Be mindful of the small amounts you spend: £5 a day on things like coffee and snacks is £1,800 a year – or £73,000 over 40 years. That’s around twice the average private pension (£37,000) we retire with.
FTA: How might regulated financial advice benefit average income households, especially during the current crisis?
MM: Regulated financial advice could help greatly for medium to longer-term planning. Things like mortgages and investments or what to do with a bigger pool of money.
If someone has debt, strategies to reduce or consolidate that can be extremely beneficial.
An area I’ve mentioned that is unregulated and underserved but can probably have the biggest impact is people’s spending.
Small amounts wasted or saved daily can have major effects over a lifetime. There’s a great book by US author Andrew Tobias called The Only Investment Guide You’ll Ever Need, and a good chunk of the book is devoted to spending well and wisely before even thinking about investments and more complex financial products.
