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The biggest challenges of 2011

International advisers see maintaining a profitable business as their biggest challenge for 2011.

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An online poll of more than 70 advisers by International Adviser, found that concerns over regulation are at the forefront of advisers’ minds for next year, with 34% saying the associated costs will make it increasingly difficult to maintain a healthy profit and 23% concerned about keeping abreast of any changes.

“Advisers need to make sure they are keeping themselves in the loop by making sure they have good sources of information,” said Paul Stanfield, chief executive of the Federation of European Independent Financial Advisers.

“This could be through having good legal advisers on hand, attending industry forums or getting involved in any conferences or training provided relating to regulatory aspects.”

However, Stanfield warned, while taking advantage of the many free forums offered by providers can be a good way of keeping up to speed with regulation, the time spent away from the office can prove just as costly.

“It is not just the obvious tangible costs of regulation which present advisers with a challenge, it is the time spent away from one’s clients which, in some circumstances, can prove far more costly than the regulatory fees,” added Stanfield.

In a similar vein, 15% of advisers said they are concerned about keeping up with new qualifications, which, said Stanfield, is symptomatic of the influence the UK’s Retail Distribution Review is expected to have on other markets, most notably in Europe.

“We have already seen Jersey announce a proposal for an RDR-like regime in 2014, Guernsey is also rumoured to be introducing something similar and it is almost inevitable that other European countries will follow suit,” said Stanfield. “Therefore, if you follow the belief that the EU often uses the UK’s system as a blueprint, advisers are probably right to expect an increasing emphasis on qualifications.”

Finding competitive products for clients was also cited as a challenge for advisers for the coming year, receiving 17% of vote. This, said Stanfield, can also in part be attributed to regulation as, in Europe at least, the establishment of a single market has on the one hand bettered the regulatory framework but has in turn reduced the number of products on offer.

“As regulation gets tighter, some providers may decide certain markets are not big enough for them with the increased costs, therefore reducing the number of products and fewer products do not generally lead to better prices,” added Stanfield.

Recruitment was one of the lesser concerns cited by advisers in the International Adviser poll but still received over 10% of the vote. However, Stanfield said encouraging good quality advisers to the international market is the most commonly quoted problem by FEIFA members.

“There seem to be many obstacles to recruiting in the offshore market,” explained Stanfield. “Firstly, it is often the case that recruitment agencies do not understand the market and therefore are unable to explain the benefits and opportunities clearly to prospective advisers. There is also, unfortunately, some misconceptions about advising offshore which can be a block to successful recruitment.”

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