Bridging the protection gap: A Strategic Opportunity for Wealth Advisers

The FCA’s Financial Lives Survey 2024 paints a sobering picture of the UK’s financial landscape. Despite modest improvements in some areas, millions of adults remain financially vulnerable, under-protected, and ill-prepared for life’s inevitable shocks. For advisers, this presents not only a regulatory imperative but also a strategic opportunity to enhance client outcomes and support long-term wealth planning. 
 

A stark protection gap 

Despite these vulnerabilities, only 46% of adults hold any form of protection insurance. Life insurance is the most common, held by just 28% of adults. Critical illness cover and income protection fare even worse, with take-up rates of 13% and 9% respectively. 

This protection gap is particularly acute among those who need it most. Between 2022 and 2024, the largest decline in having any protection products was amongst those with household incomes of £30,000 - <£50,000.  And over half of self employed adults (54%) had no protection products in place. Among renters - a group more likely to be financially stretched - 75% do not have contents insurance, let alone income protection or critical illness cover. 
 

Reframing the protection gap 

Traditionally, protection has been viewed as a concern for those with limited means. However, the survey shows that financial fragility affects a broad spectrum of clients, including those with significant assets but low liquidity or high fixed costs. Wealth advisers are uniquely positioned to address this gap by integrating protection into holistic financial strategies. 

Protection products such as income protection, critical illness cover, and life insurance can safeguard clients’ financial plans against unexpected events. By incorporating these into wealth planning, advisers can help clients preserve their investment strategies, maintain lifestyle continuity, and protect intergenerational wealth. 
 

Why advisers must step in 

These figures highlight a systemic issue: too many consumers are navigating life without a safety net. While affordability is often cited as a barrier, the survey also reveals a deeper issue - a lack of awareness, understanding, and engagement. 

This is where advisers can make a transformative difference. 

1. Educate and Empower: Many consumers underestimate the value of protection products or assume they are ineligible. Advisers are uniquely positioned to demystify these products, explain their relevance, and tailor solutions to individual circumstances. 
2. Proactive Engagement: The survey shows that only 8.6% of adults received regulated financial advice in the past year. Advisers must do more to reach out - especially to younger adults, renters, and those with low financial resilience - and initiate conversations about protection. 
3. Reframe the Conversation: Protection should not be an afterthought. It is the foundation of any robust financial plan. Advisers must reframe protection not as a cost, but as a critical investment in financial security and peace of mind. 
    

The human cost of inaction 

Behind every statistic is a story. The survey includes powerful consumer testimonies - from individuals overwhelmed by debt after a bereavement, to single parents struggling with mental health and financial stress. Many of these situations could have been mitigated - or even avoided - with appropriate protection in place. 

For example, income protection could have provided stability during illness. Critical illness cover could have eased the financial burden of a cancer diagnosis. Life insurance could have safeguarded a family’s future after the loss of a breadwinner. 
 

Meeting regulatory expectations 

The FCA’s Consumer Duty reinforces the need for firms to act in customers’ best interests. This includes ensuring that products meet their needs and that they receive the support required to make informed decisions. Advisers who fail to discuss protection with clients - particularly those who are vulnerable - risk falling short of these expectations. 
 

A commercial opportunity 

Beyond the ethical and regulatory imperatives, there is a compelling commercial case. The protection gap represents a significant untapped market. Advisers who lead with empathy, education, and tailored advice can build deeper client relationships, enhance trust, and grow their business sustainably. 
 

The time to act is now 

The Financial Lives Survey 2024 is a wake-up call. Millions of UK adults are financially exposed, under-protected, and unaware of the risks they face. Financial advisers have both the opportunity and the responsibility to change this. 

By prioritising protection, advisers can help clients build true financial resilience - not just for today, but for whatever tomorrow may bring.  

Source:

FCA Financial Lives Survey, 2024