Tailor your advice to suit debt group

BRIAN FERGUSON, DIRECTOR, INVOCAS FINANCIAL INTERMEDIARY SERVICES
BRIAN FERGUSON, DIRECTOR, INVOCAS FINANCIAL INTERMEDIARY SERVICES

A growing debt net has been created by recession and job losses, and more consumers are being dragged into it than before.

The net has widened to include greater numbers of higher earners and shows that those struggling with debt come from varied walks of life. We have looked at debt patterns across the UK, surveying 4,038 debtors, and have found four categories into which the most at-risk debtors fall:

  • Young shoppers: Young single people with no dependents, low-to-modest incomes and few assets. Keen to be trendy, they tend to spend on credit and store cards.
  • Traditionalists: Wary of using credit, but have raised families on low incomes. They own few assets. Having been forced to use credit to survive, they are struggling with debt repayments. They are often retired or work in blue-collar roles.

    Overspenders: White collar workers, usually in their 40s or 50s, who own the most assets of the four groups. But they spend beyond their means and have depleted savings. Sudden life changes such as redundancy can stretch finances.

    Hard-pressed families: With young families and often single parents, this group lives in low-value housing and struggles on restricted incomes. They enjoy shopping sprees, but are usually unable to indulge because of family commitments.

As the debt net continues to widen, brokers are increasingly likely to see clients whose debt problems are becoming unmanageable. So it is vital they are in a position to provide them with advice tailored to their needs.