The number of man hours and resources required to deliver financial planning to the standards required under an incresingly complex regulatory regime are starting to place a strain on advisers’ ability to take on new clients.
This was cited as the biggest threat to their business by 76% of advisers attending International Adviser‘s Future Advisory Forum Europe, which was held in London in September.
Square Mile Research surveyed the European financial advisers at the event on a range of topics, including client engagement, future business opportunities and their investment propositions.
From a gap to a canyon
Other drags on resources include the challenge of implementing the myriad of regulation and, of course, recruitment and succession planning.
A third of the firms surveyed identified the latter as a core issue.
John Lester, business development director at Square Mile Investment Consulting and Research, commented: “This is not surprising, given the demographic of the financial advice community.
“If we don’t encourage and attract more talent into financial advice as a profession; we will find ourselves, within the decade, in a situation where the advice gap widens into an advice canyon.
“The baby boomer generation is already retiring or passing wealth on to the next generation. This is arguably when sound financial advice is needed most, and while robots can help meet some client needs, there is little substitute for sound, personalised financial advice.”
Adapting for opportunity
The application of technology was cited as having the greatest positive impact within their businesses by a third of advisers.
While a fifth noted that adapting their investment solutions would bring with it greater opportunity.
Platform technology has already helped streamline adviser businesses, but the impact of product governance and oversight requirements under the Prod regime will challenge advisers to search for efficiencies across their investment proposition.
Suitable for clients
“It has never been more important for advisers to review their business models to ensure it is fit for purpose,” Lester added.
“All of the advisers that we work closely with have embraced the changing regulatory environment as a catalyst to drive efficiencies right across their businesses.
“While outsourcing does provide a number of advantages for adviser firms, embedding an independent investment service within their firms has helped advisers ensure that their investment proposition meets the suitability requirements of each of their clients.
“This in turn provides the peace of mind that a team of unconflicted and independent investment professionals are actively reviewing all of the funds within their client portfolio, to the adviser’s specifications.”
He added: “This streamlining of the investment proposition goes a long way to freeing up capacity within the advice businesses we work with, enabling them to not only to meet the needs of their existing clients, but also to attract new advisers and clients thereby growing their business.”
