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Just 21% of advisers have a strategy to attract younger clients

As most believe that COP26 has been a significant driver of demand for sustainable investments


The majority (74%) of UK financial advisers believe that the great wealth transfer is an opportunity for their business, according to Schroders’ 2021 UK Financial Adviser Survey.

But the survey also found that 71% of advisers have a client bank of people between the ages of 51-64, rising from 64% in 2020, and one-in-three respondents said they have a specific proposition for addressing the transfer of family wealth to the next generation.

Even worse, just 21% said they have a sales and marketing strategy specifically aimed at younger investors.

This is further supported by the survey results indicating that the percentage of advisers which will accept new clients with less than £50,000 ($66,181, €58,483) has been continually declining and is now at only 39%.

Succession planning

The report, which surveyed 203 UK advisers, also discovered that regulation and professional indemnity insurance cover remain the top two concerns going into 2022.

But succession planning and exit strategies have now risen to third place with 13% saying it was a top concern. Last year, only 3% of advisers considered succession planning as a top worry.

Gillian Hepburn, head of UK intermediary solutions at Schroders, said: “The increase in the focus on succession planning and exit strategies as we move into 2022 is fascinating and there are many reasons why this might be the case, not least of all the valuations currently being offered by private equity companies.

“However, if advisers can’t demonstrate a connection to the next generation, then a lack of a wealth transfer, or indeed a wealth retention strategy, could cause some challenges with business valuations at the point of sale.

“Only one-in-five of advisers identified the rise of younger generations investing in Bitcoin and crypto as a threat to their business. This is an interesting view; there is a generation which is engaging in investing, but perhaps not in a ‘traditional way,’ and an ongoing lack of engagement from advisers with the very generation who will inherit wealth, and in some cases already inheriting.

“This could result in the next generation choosing an online or hybrid advice solution when they inherit wealth, rather than using their parents’ adviser.”

Inescapable truths

Over the last 12 months, financial advisers’ short-to-medium term expectations have shifted significantly.

According to last year’s survey, most advisers (71%) thought there would be little change to interest rates over the next five years and less than half (47%) said they expected inflation to rise.

However, Schroders 2021 Financial Adviser Survey, revealed that the majority of advisers (79%) expect higher interest rates, whilst three quarters are forecasting higher inflation over the next five years.

Despite a slight downward trend since May, importantly, growth expectations have remained buoyant with over half (58%) of advisers expecting higher growth over the same period.

Demand for sustainable investment

Schroders also found that investing sustainably and in line with net zero commitments has accelerated exponentially.

This year’s survey found that the majority (75%) of advisers have seen an increase in the number of clients asking for sustainable investments over the past 12 months.

In fact, many (64%) believe that COP26, which took place in November, has been a significant driver of this higher demand.

In response, this year 80% of financial advisers said that they explicitly consider environmental, social and governance (ESG) factors in their investment decisions, almost doubling over the past two years from 43% in 2019.

When it comes to talking to their clients about sustainable investing, advisers’ confidence is improving overall. However, half (51%) are still rating their confidence level when discussing sustainability as average or below.

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