HELPING YOU TO GIVE MORE ADVICE
Landscape overview
Ken Davy Founder of SimplyBiz and Fintel
2023 saw quite remarkable turns of fortune in the economy and economic policy , coupled with huge world events which have challenged and tested systems and markets . We also faced a torrent of regulatory change to keep us all on our toes .
Professional advisers have dealt admirably with the implementation of Consumer Duty , the new AR Regime and increased RegData reporting . They now turn their attention to the retirement income advice review , later life lending review and the candid Dear CEO letter on the FCA ’ s expectations for wealth managers and Discretionary Fund Managers ( DFMs ). The reason so much has been achieved in a single year is because the great majority of advisers have been building better businesses . They have been building businesses with clear propositions , clear target markets and services . The successful businesses have embraced technology on a massive scale from where things were a few years ago . They have shown brilliant agility and ability to read the lie of the land and adjust to change with speed and conviction . The result is that , despite all of that change and challenge surrounding them , I am really pleased to see that growth is now at the top of the agenda for a majority of advice firms . While 70 % of professional firms who responded to our 2023 adviser survey told us that they found adopting new regulations to be one of the biggest challenges in their business , nearly as many ( 65 %) now say growth is their key objective for the year ahead . On the downside , we have seen fairly static numbers in the profession , and we need to do more to attract talent and retain experience . It is a return of the desire to grow their businesses that will ultimately see them taking on more clients , hire and train more paraplanners and advisers , and be the driver for expansion . We must all do everything we can to enable this to happen . When looking forward to 2024 , and imagining how our focus and experiences will be shaped in the year ahead , I am reminded of the excellent paper recently published by AKG on the Future of Advice . The paper concluded that the backdrop of pressures and uncertainty are inescapable for most clients and their families , and that the economics of professional financial advice will make it difficult for it to be available to everyone . Professional financial advice has been , and remains , the gold standard for quality and outcomes for consumers . This is because it is driven by professional experience and a true sense of duty to the client and their lifetime objectives . It should never be watered down or in any way described in the same terms as other , lesser , services for clients to access financial products . We should instead
commit , as an industry , and with every participant playing their part , to signpost professional advice clearly for all . We need to make sure consumers can understand it , can see the value of it and then work out if it is likely to be of value to them , at this point in their life and circumstances . Technology will play an enormous part in helping more clients access the huge benefits of professional financial advice . The sector will continue to drive more efficiency and productivity , and I predict that firms will be able to serve more clients in 2024 as they reap the rewards of efficiency they have delivered over the past three to five years of investing in their businesses . This is great news for everyone , and , thanks to technology , I believe it is possible we can double the number of advised clients over the coming three to five years . There then remains a huge ‘ Advice Gap ’. Or is it ? If we continue to refer to the problems facing consumers in terms of an ‘ Advice Gap ’, we perpetually run around a maze with no exit . There has to be a credible alternative to advice . There must be a solution whereby consumers are provided with information and education , and they can choose products for themselves in a clear and fair marketplace – but with responsibility for the outcome of their decisions . When we look at what is most valued by consumers who take advice , it is the personal interaction and the transfer of risk , delivering peace of mind . At the moment , there are simply not enough human professionals to help everybody with every decision they need to make , and we cannot only have services where the risk of outcomes sits away from the consumer . There is a huge role for the workplace in meeting the demand for safe spaces where consumers can take , and be responsible for , their own financial decisions . Presently , the regulator risks pursuing an obsession with ‘ the perfect as the enemy of the good ’; constantly placing professional financial advice under the microscope . Professional financial advice is doing its job for the people that can get the most value from it . It is , in fact , doing a fantastic job for over four million consumers and their families , with aggregate wealth under advice exceeding £ 1 trillion . It may not be absolutely perfect , but it is not the problem that so desperately needs fixing . We need to create a fair marketplace for consumers to engage , understand their needs and provide them with information so they can take responsibility for the choices they make and the products that they choose to buy . This is our big challenge , and throughout 2024 we must make some meaningful headway on transforming the retail financial services market , for the sake of the UK economy and overall societal wellbeing .
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