Advisers are dealing with a number of headwinds including rising business costs, increased workloads and heavier regulatory burdens, according to Embark’s Investor Confidence Barometer.
The survey found advisers’ costs are being driven up by the increased workload caused by changes to government policy, combined with the regulatory obligations from the Consumer Duty. Three fifths (60%) of advisers agreed that ad hoc changes to tax policy are having a larger effect than before on their business processes. A similar proportion (63%) said they will need to outsource to meet Consumer Duty requirements and 30% admitted they are not confident that they are ready for the Duty to come into force in July.
Embark said increased pressures are being compounded by higher business costs, with only 38% of advisers believing that inflation will be brought under control in the next two to three years.
While the majority of advisers (57%) agree that the Consumer Duty will prompt them to move lower-value clients out of legacy products into new lower-cost products, 84% have also increased their minimum portfolio value for new clients. Two thirds (66%) have also increased, or will increase, their charges for lower-value portfolios due to the extra work required by the Duty.
On a more positive note, 62% of advisers agree that the proposal for a low-cost simplified advice regime will have no impact on their business, as it targets different consumers with smaller cash balances and 60% agree that FCA intervention in this part of the market could be successful in reducing the advice gap.
The Barometer also showed that Covid, soaring inflation, higher interest rates and supply-chain issues resulting from the war in Ukraine have piled pressure on businesses and affected advisers’ mental wellbeing. More than two fifths (43%) are struggling to find motivation and 40% are experiencing greater levels of anxiety. Of those who experienced mental health pressures, 70% agreed that rising business costs were a contributing factor, while 65% cited increased client expectations and 64% listed increased workloads.
Ranila Ravi-Burslem, intermediary distribution director at Embark Group, said: “People’s awareness of mental health and their willingness to discuss it has grown immeasurably in recent years. We know from our engagement with advice firms that they are really feeling the impact of heavy compliance burdens, higher workloads and increased business costs but our survey really helps put this into perspective.
“Providers and platforms must do more to support advisers and help lighten their workload.”
