Advice firms in general have “proved very resilient” throughout the Covid-19 pandemic, according to the latest report from industry research company AKG.
The report points in particular to firms’ ability “to manage and service effectively” their existing client base, through the adoption of new technology and servicing techniques. However, it highlights that in most cases the innovations have yet to be extended effectively to new business/new client attraction, stating “this remains a challenge therefore for advisers and onwards to provider, offshore, platform and DFM companies in 2021.”
While highlighting “generally good financial health” for the majority of companies in the sectors assessed, including intermediaries, platforms, DFMs, providers and offshore, the report points to what it terms as “a limited number of companies, often larger sized”, that were “more challenged and less able to reposition operations” as quickly as others when the pandemic hit. “Despite their resources, their scale has hindered the ability to react optimally for customer benefit.”
The report focusses on five key areas: Financial; Business Continuity and Risk Management; Service; Stakeholders; and a further specific section on Technology.
It is the “more technologically enabled and resourced” companies which have adapted best to the changing environment, AKG reports.
“Technology adoption, innovation and some IT infrastructure and other projects have often leapt forward to meet immediate business continuity requirements and customer needs. The majority of which will be retained and hopefully further built out from,” the report says.
In particular it highlights how companies that were already more advanced in their digital capabilities “reaped the benefit of their prior investment and smoothed the pathway to changed working practices and other developments”.
The report also notes “rapid leaps in technology introduction, with aspects of some companies’ key infrastructure advancing in months or even weeks, to a degree that would previously have taken several years”.
Likewise, digitalisation of interactions between colleagues, partners and customers (therefore throughout the value chain) has been central and has advanced by several years.”
While noting the operational resilience shown by many companies and advice firms, AKG warned that conditions (including the economic medium term) “will remain challenging”, with the current lockdown implications extending and deepening difficulties in the environment for many companies.
AKG undertook a paper on the ‘Future of Advice’ including significant research with adviser firms in 2020, which also feeds into the latest report.