Dynamic Planner’s CEO Ben Goss believes advice firms are positioned to thrive in 2023 if they view regulatory and technological change as opportunities to better support clients old and new.
We believe there are 5 key themes which will play out over the next 12 months:
1. Consumer Duty drives embrace of PROD
With Consumer Duty, the regulator has set the industry an exam question: what’s the net value you’re delivering to your client – if they’re in drawdown, if they’re in accumulation, if they’re just starting out. But it’s also provided an answer in the form of PROD and target markets. Like many industries before it, the advice industry has an opportunity to embrace mass personalisation, using technology to deliver differentiated propositions for different client segments, at different price points.
2. Uncertainty is the only certainty
With the UK in a recession forecast to last more than a year, and with war in Ukraine continuing to send repercussions through economies and markets, existing clients will need more support and the wave of new clients looks set to persist. As with all periods of uncertainty, these challenging times are a reminder of the value of advice, the power of diversification and the importance of risk-based planning.
3. Hybrid models unlock value
Advice firms have hung on to the hybrid working models they established during the pandemic – and are reaping a clear productivity dividend. The opportunity now is to build on that. Access to advice has been constrained by the traditional financial, commercial and technical model. Technology can help firms to crack that open, unlocking pockets of profitability and value in existing client bases and opening up new addressable markets
4. SDR heralds sustainability 2.0
If the energy crisis brought an end to the first flight to sustainable investing, it also provided the latest reminder that the shift away from fossil fuels is not optional. With Sustainability Disclosure Requirements (SDR) and fund labels on the horizon, and with two-thirds of investors caring somewhat to a lot about the sustainability of their investments, the task for advisers becomes to help clients fund their futures at a risk that’s right for both themselves and the planet
5. Professionalisation drives further consolidation
As the industry continues to professionalise and address cost to serve, it only becomes more attractive to private equity investors. Therefore, the consolidation trend should continue apace, with buyers continuing to drive efficiencies by centralising businesses around simpler propositions and consistent customer experiences.
There is undoubtedly a tough winter ahead for investors, and financial advice will be more valuable than ever. Regulatory and technological change should help increasing numbers of clients to find the support they need by removing barriers to advice and reducing cost to serve. Challenging times are also the times when innovations emerge and find fertile ground. As an industry, I hope we’ll embrace opportunities to become more responsive, more tech-driven, more professional, more consumer-focused and more accessible.
