Advisers are expecting firms to be shut or sold in the wake of the Covid-19 pandemic, despite a rise in demand for advice, new research from analyst AKG has shown.
In its paper Future of Advice – Beneath and Beyond, more than half (53%) of advisers said they believe firms will shut as a result of recent events, while 45% expect more advisers to retire and just over a third (34%) forecast a rise in the sale of businesses.
At the same time, advisers predict demand for their services will grow, with 52% believing they will attract more business from existing clients, while a similar number (48%) expect more work from new clients.
Research among consumers questioned for the paper has shown that nearly one in five adults (17%) – around nine million people – say they need advice to address financial issues caused by Covid-19. More than two out of five (44%) feel concerned about the risks from major shocks such as pandemics.
However, AKG warned of the impact on new business from Covid-19 with firms struggling to attract new clients beyond personal recommendations while dealing with changes to their service models. Over half (55%) of customers would prefer to see an adviser face-to-face compared to 22% who would prefer to rely on technology.
Matt Ward, communications director, AKG (pictured), said: “It is difficult for advice firms to think beyond the immediate day-to-day pressures of responding to the massive impact that COVID-19 has had and is having. But they need to look to the longer-term and particularly when so many firms are expected to leave the industry at a time when advice is needed so much, and demand is growing.
“Intermediary distribution is the lifeblood of the financial services companies assessed by AKG and so a key part of our work in assessing the operational strength and sustainability of these companies involves close monitoring of the likely future shape of the advice market.
“Through this fresh research and its findings, we wanted to provide a platform for ongoing industry discussion and debate.”
The research paper is free to download at: https://www.akg.co.uk/downloads