In what has been a challenging year from both an economic and regulatory perspective, resilient advice firms are embracing change and looking to the future, reveals new research from Dynamic Planner, the UK’s leading risk based financial planning system.
Published today, Dynamic Planner’s third annual Spotlight Report ‘Resilient and Embracing Opportunity: The financial advice landscape in 2023’, has found that while regulation was cited by 1 in 4 as being the no 1. headache for 2023, firms have shown their mettle, with 9 out of 10 confident they have met the key outcomes of Consumer Duty despite the significant challenges it presented.
Technology has been a key enabler, with 85% of the group, drawn from one of the largest advice communities in the UK – the 6,950 users of Dynamic Planner – saying it has improved their ability to serve clients, and close to three-quarters believing it is also helping them to meet regulatory requirements.
Yasmina Siadatan, Chief Revenue Officer at Dynamic Planner said: “The financial advice industry has embraced technology and its ability to help firms meet regulatory requirements, whilst unlocking productivity gains and deepening client relationships. Advisers were faced with a significant test this year in the form of Consumer Duty – but despite the challenges, the mood is one of resilience and looking to the future.”
Overall, the picture that emerges from this year’s survey is of a thriving industry. Firms continue to increase adviser numbers, and the vast majority of advice professionals are serving more clients than they were three years ago. However, 2023 undeniably brought challenges in the form of a more difficult economic environment and a major regulatory deadline. As a result, the picture is more nuanced than it was in 2022.
Key findings for 2023 include:
- Advisers are happy in their roles and would overwhelmingly recommend careers in the industry to others, 9 out of 10 under 30’s would recommend financial advice as a career.
- 70% of advisers are servicing more clients than they were three years ago.
- 41% are using apps or tools to conduct risk profiling.
- Almost two thirds of respondents from larger firms expect to actively grow their business over the next five years. They are the most likely to have expanded over the past three years and are the most bullish about the future.
- Smaller firms are the most likely to have reduced adviser numbers, and close to a third of those in single-adviser firms are looking to retire or sell up. As a result, the consolidation trend in the industry looks set to continue apace.
- By age some differences emerge. Those in their mid-careers, who have the benefit of experience but also years ahead to ride out the challenges, are particularly likely to recommend careers in the advice industry to others. They are embracing the opportunities ahead by adopting new technologies and serving younger clients.
- Advisers aged 55 and over are most likely to have reduced their client load over the past three years, while more than 70% of advisers aged 60 and over expect to retire or sell their businesses in the next five years.
- Advice is in high demand, with 1 in 2 firms seeing an increase in new client enquiries over the past three years.
- However, firms continue to identify significant barriers to serving lower-value clients. Time is cited as the biggest obstacle by two thirds (66%) of firms, followed by profitability (64%) and regulation (37%). Around 1 in 10 (11%) feel lack of demand is an issue.
- For those firms requiring a minimum level of investable assets, the most common threshold is £100,000.
Yasmina Siadatan continued: “Overall, despite the economic environment and regulatory shift, the mood is positive, and some of the challenges may be easing as 2023 draws to a close. Although Consumer Duty implementation has not been easy with firms viewing regulation as their biggest headache – they also are confident they have got it right.
“Firms are making significant productivity gains through the use of apps, tools and other new technologies, allowing advisers to service more clients more efficiently. As these efficiencies grow, firms could unlock the ability to service lower-value clients – something they currently identify as too time-consuming for the profits available.”
Download the full Spotlight report.