3 minute read
The demand for financial advice continues to rise, great news on the face of it, but so does the number of challenges faced by the industry. Regulatory changes, market uncertainty, managing client expectation and managing risk means financial advisers face significant pressure on their time on a daily basis.
Looking back, the pensions industry has seen significant, and what feels like constant changes to regulation. This has meant the role of a financial adviser has changed considerably.
In 2013, the implementation of the Retail Distribution Review (RDR) changed the advice landscape massively. Moving away from a world of product recommendation and commission, to a focus on service delivery and fees paid by clients.
Pension Freedoms were introduced only a couple of years later, in 2015. Offering increased choice and flexibility for clients for their retirement plans, and bringing with it increased complexity and arguably, an increased need for financial advice.
And most recently, in 2018, the FCA introduced the new Product Governance Sourcebook (PROD) as a result of MiFID II, to help improve advisory firms’ product governance processes. PROD is a clear set of rules that advisers need to adhere to and build into their business models. It sets out the need for advisers to understand their clients and to develop advisory and service propositions that suit.
80% of advisers say the regulatory change and the compliance burden are among their top three business challenges. 49% say it’s their number one business challenge1
If not already doing so, advisers now need to identify the different client types within their client bank, ideally by their circumstance rather than their funds under management. Segmenting by circumstances such as life stage or saving and income needs allows advisers to clearly define what services and support their clients need. Advisers can then build appropriate advisory and service focused propositions, for all of their clients.
Of course different clients are always going to have different needs, and these can range from the straightforward to the more complex. Recognising this, and then being able to deliver the range of services needed is a time consuming but necessary process.
This is why advisers aim to reduce the time they spend on transactional work to increase the time they can dedicate to client reviews. Ultimately allowing advisers to demonstrate the value they provide.
Unsurprisingly, research shows a key complaint from advisers is the cost impact of regulation changes in terms of both time and money1 as a lot of administration work is linked to regulatory compliance requirements.
It’s difficult for advisers to carve out time for their most important role of servicing their clients, and having valuable conversations to see if they’re meeting their retirement goals.
Making use of online services is one way of reducing this burden – offering speed and automation to help free up resource, helping to improve efficiency and simplify processes. So advisers seek out digital capability, whether on or off platform to support all parts of their business model and service proposition.
There’s no doubt that the daily challenges faced by advisory firms are considerable, with numerous requirements to juggle. Administration overload is not the only issue, but it’s one that is easy to tackle – making the most of the online services available to advisers will go a long way to help save time, and relieve just a bit of the pressure.
This information is for UK financial adviser use only and should not be distributed to or relied upon by any other person.