What’s keeping you up at night? We shed light on what financial advisers are worrying about
In a world inundated with research surveys, it’s easy to become immune to their findings. But one survey we always find fascinating is Schroders’ UK Financial Adviser Survey.
Following the challenges thrown up by the global coronavirus pandemic, this year’s results provide useful insight for those of us looking forward and wanting to plan strategically for better times to come.
Here are the highlights of what is causing concern amongst Britain’s financial planners and advisers, and a few suggestions you might find useful to improve your service offering.
The survey found that regulation was the top concern.
Following the introduction of PROD (Product Intervention and Product Governance Sourcebook) regulations in 2018, the percentage of advisers who segment their client base stands at 66%. However, 69% of these still segment their clients based on the assets they have under management, rather than their age, life stage or other factors which separate them.
PROD was introduced to ensure that investment products being recommended to clients fulfil one or more identified target markets, are distributed appropriately and deliver appropriate outcomes according to client needs.
Only 19% of advisers said they considered life stage when segmenting their clients.
Segmentation stages may include:
- Starting wealth
- Building wealth
- Transition to retirement
- Later life.
Some advisers go further and sub-segment. For example, clients in later life who require income from their investments and those who want to protect their assets in order to transfer them to the next generation.
Once the preserve of institutional investors, Environmental, Social, and Governance (ESG) investing is in fashion; if you don’t bring the conversation to your clients, they could bring it to you.
New ESG funds are regularly entering the market with at least 580 funds having been introduced as sustainable over the past decade.
ESG is an important consideration for 74% of advisers, yet only 42% of these advisers feel confident when discussing the topic with clients.
With sustainable investing rising in popularity, and soon to fall under the suitability rules, now is a good time to start getting a better grip on how you can take sustainability preferences into account when talking with clients about suitable investment opportunities.
Fees and charges
One of the headline concerns is how much advisers can charge for the service they provide. Schroders report that 43% of financial advisers felt pressure to reduce their charges.
The price/value debate has been raging for years and this isn’t likely to change, especially with the added pressure of investors being presented with many more ways to invest their money without feeling the need to pay for advice.
Self-investing continues to grow in popularity and armchair investors are on the rise. Apps such as Nutmeg, Moneyfarm, and Freetrade appeal direct to the consumer and let customers invest their money with little hassle and low fees.
An FCA paper revealed the number one reason why people with cash to invest didn’t take advice: they didn’t expect to benefit by doing so. The paper also suggested that those who would seek advice would expect to pay £250 or less, no matter the amount they invested.
How you value advice needs to align with how consumers value it
One way to ensure you’re making the most of your value proposition is to describe your service offering in a way that clients can easily relate to.
Peace of mind is key – having you to take care of their investments, tax planning and protection needs, means one less thing for your clients to worry about.
The way you deliver your service also matters. Are there ways you can improve the service you’re offering? Can you add value to the way you’re communicating with your clients about their retirement, finance and investment decisions?
Using client-facing software can enhance the service you’re providing and add to the value proposition you’re delivering. It can also reduce the time and cost in bringing onboard or servicing clients, whilst building greater trust, strengthening brand association, and allowing you to service a wider range of client segments more profitably.
Throughout this unusual and challenging year, many advisers found themselves having to spend more time servicing existing clients.
Whether caused by the challenges of the pandemic or lack of knowledge about the immediate future, 43% of advisers admit to spending less time than usual on marketing to attract new clients.
When around 50-75% of advisers report an average client age of over 65, it’s worth asking why you’re not more concerned with growing your client list.
As your older clients move into drawdown or die, the assets of your business can reduce. This may be another strong argument to implement client segmentation by life stage and building a targeted prospect campaign into your process for attracting and taking on clients.
If you haven’t already got a strategy in place for attracting and keeping the next generation, now may be a good time to make one.
Attracting female clients
Two-thirds of “baby boomer” wealth is held within couples and wealth transfer typically starts by moving from husband to wife.
With 75% of women reported to move financial advisers on inheritance, it’s a good idea to have a strategy directly aligned for keeping or advising women, especially those who are divorced or widowed.
How are you differentiating your service proposition to attract female clients?
While we like to think we’re moving towards a more equal society, women face different challenges when it comes to their finances and planning for the future.
Things you could consider in your approach to attracting more female clients might include:
- Gaps in working life – this will impact their income, and perhaps their protection needs.
- Retirement provision – while 52% of men know how much they need for a comfortable retirement, almost three quarters of women don’t know how much they need.
- Divorce rates – with 42% of marriages now ending in divorce and those doing so aged 55 or over at an all-time high, women may benefit from expert planning relating to Pension Sharing Orders, investment of assets following a divorce settlement or adjusting to a change in income needs.
- Lower returns than men – women are often considered more risk-averse than men, yet with the longer lifespan, risk aversion may cause many women to miss out on greater long-term returns from investments.
How AdviceBridge can help
The AdviceBridge platform is designed to help planners work more efficiently and extend their services to more clients.
The white label platform digitises many of the manual, time-consuming processes, integrating your current software, providing you with more time to focus on the relationship rather than admin, research, or reports.
Whether you want to spend valuable time with your clients, make your business more cost-efficient, or get automated alerts for potential advice opportunities, the platform is a great way of maximising profits.
Get in touch
If you want to find out how AdviceBridge can benefit your business and your clients, please get in touch. Email firstname.lastname@example.org or call us on 020 3925 3850.