It’s planning time again! As we reach the end of the year, we reflect in many ways but also start to look to the following year - planning holidays, special occasions, thinking about a ‘stress-free’ Christmas and perhaps even some business planning!
With this in mind, it can be helpful to know what other financial advisers are thinking. To provide some insight, here are some of the key takeaways from our newly published Annual Adviser Survey:
Each year we ask advisers to identify the key challenges they face going into the next year. ‘Regulation’ and ‘rising PI costs’, have ranked 1 and 2 for many years. However the next biggest challenge has changed in a way that gives pause for thought.
Last year, ‘finding new clients’ came in at number 3. This was hardly surprising. Advisers couldn’t meet new clients face-to-face during lockdown and much of their time was taken up with supporting their existing clients through the market volatility to ensure they stay invested.
This year, ‘finding new clients’ is way down the list, replaced by ‘succession planning’.
Why the change? We constantly read about M&A activity, private equity providing ‘interesting’ business valuations, and consolidators on the acquisition trail. Is this simply an opportune moment for advisers looking to sell? Our survey highlighted that 43% of advisers have clients have brought forward their own retirement date. Has the pandemic also caused many advisers to press the ‘reset’ button and rethink their future? Or are their responses a bi-product of the top 2 challenges – regulation and PI costs? Whichever way, the scale of this activity looks set to continue in 2022.
COP26 has put climate change firmly on the agenda and 64% of advisers surveyed said that this would increase customer demand for sustainable investment products. 75% also indicated that they had seen an increased demand for sustainable investment options in the last twelve months.
In addition, 81% of advisers told us their fund selection process included ESG factors - a massive increase from 43% only two years ago!
However, 51% said that their level of confidence when talking to clients about terminology, regulation and ESG integration was ‘middling or below’. Hopefully the FCA consultation on a new taxonomy will help to clarify terminology and support a move towards greater consistency across the industry. Perhaps 2022 will also be the year for us all to work together to further increase both adviser and client knowledge in this area?
Around two-thirds of advisers identified that they use some form of outsourced portfolio management with 21% making ‘extensive use’ and 16% expecting to increase their level of usage. The rationale for this remains the same: the ability to spend more time with clients and access to investment expertise and resources.
As many of you may know, my favourite topic! One third of advisers continue to tell us that they have a specific proposition to target the transfer of wealth to the next generation and nearly 75% identify this as an opportunity.
However, 48% of advisers told us that the average age profile of their clients was increasing and the number who have a differentiated sales and marketing strategy for younger clients remains around 20%. Worryingly, the number of advisers taking on clients with less than £50,000 to invest has dropped to an all time low of 39% so clearly there is still some work to do!
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