Financial advice threats and opportunities
4 February 2019
Brexit is proving a contentious issue for the advice industry, with over half of advisers viewing it as a threat, while a quarter cite it as an opportunity.
According to the latest research by Aegon, 51% of those surveyed saw Brexit as the biggest threat to the advice sector, while 27% viewed it as a key opportunity with another 22% citing non-Brexit political uncertainty as an opportunity.
Steven Cameron, pensions director, Aegon, said: “Advisers may fear that any damage to the UK’s economic performance may mean less new money for individuals and employers to invest. However, those with existing investments will need to ride out short-term uncertainty without damaging long term prospects, creating a major advice opportunity.”
Topping the leaderboard for the biggest opportunities over the next two years was defined benefit to defined contribution transfers, with 45% of advisers viewing it as a key area of growth. The pension dashboard also ranked highly, with 22% of advisers listing it as an opportunity, closely followed by social care funding (19%). Conversely, new models of advice or guidance from the Financial Advice Market Review was seen as an opportunity by just 10% of advisers.
The research also showed pension scams were considered a significant threat to the industry, with nearly half (46%) concerned about the problem, while robo-advice was listed by 25% of respondents.
Cameron said: “It is no surprise that DB to DC transfers continues to be viewed as the biggest opportunity for advice. Whilst transfer volumes may have declined from a peak at the beginning of 2018, demand for such advice continues to outstrip supply and as advisers gain confidence in the recent FCA guidance, we expect to see numbers rise again.
“The biggest disappointment, if not surprise, is that the Financial Advice Market Review is failing to register as an opportunity. This joint Treasury / FCA initiative to help close the ‘advice gap’ really should have been an opportunity to further strengthen the advice market.”
Cameron added that with the regulator promising a 2019 review of FAMR and the Retail Distribution Review, “the stakes are high” to find ways of delivering on this potential.
(Click charts to enlarge)
Charts source: Aegon
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