Schroders UK Financial Adviser Survey 2024: Advisers anticipate move to equities as investors reduce cash holdings
Investors are increasingly moving away from cash and reallocating back to equities, the 2024 Schroders UK Financial Adviser Survey has revealed.
This marks the 15th year of the survey, which has continually captured the evolving adviser landscape. The findings reflect a contrast to the original results identified back in 2009, where advisers predominantly preferred bonds over equities when recommending asset classes to their clients.
The current survey reveals a significant shift from holding cash back to investing. The percentage of advisers reporting that their clients are now investing or considering investing has risen to 67%, a notable increase from 49% in May.
This trend aligns with advisers' anticipated allocation strategies for the coming twelve months, which highlights a clear move away from cash. Although bonds still feature as they did 15 years ago, 36% of advisers now anticipate increasing their allocations to UK equities and 34% to developed international equities.
Advisers are cautiously optimistic about market performance, with 23% expecting higher equity returns compared with long-term historical averages. Additionally, 57% anticipate increased global growth. However, this optimism is tempered by concerns over potential volatility, with 70% expecting heightened geopolitical disruptions over the next five years and 43% predicting higher market volatility.
The current environment may have affected client sentiment, as the percentage of advisers reporting a bullish outlook among their clients has decreased to 34%, down from 41% in May 2024. Nonetheless, this figure remains markedly higher than the 17% recorded in November 2023.
Regulation
Regulation continues to be the primary concern for advisers as we move into 2025. This issue has steadily increased in importance, with the number of advisers ranking at their number one concern rising from 32% in 2022 to 49% in 2023. A significant contributing factor has been the introduction of The Consumer Duty, with 42% of advisers now believing it will have a high or reasonably high impact on their business, compared with 25% two months before its introduction back in May 2023.
Additionally, factors such as the focus on annual client reviews and the Retirement Income Review may be contributing to this heightened focus on regulation. Following the FCA's thematic review of Retirement Income Advice, 65% of advisers have now reassessed their proposition, a significant increase from 33% in May this year.
Additionally, there has been a notable shift towards prioritising the servicing of existing clients, now ranked as the second most pressing concern which may be indicative of the focus on annual client reviews.
Wealth Transfer
The survey highlighted a continuing concern among advisers regarding intergenerational wealth transfer, with 62% concerned about losing assets as wealth transfers across the generations. Just over half (53%) are reporting an increase in the average age of their clients over the past five years.
However, only 20% have developed a tailored sales and marketing strategy aimed at younger investors. Moreover, there has been a sharp decline in the proportion of advisers willing to accept new clients with less than £50,000, which now stands at 26%. Conversely, those willing to take on new clients with over £200,000 has risen to 24%, up from just 10% in 2020.
The percentage of advisers with a dedicated sales and marketing strategy for retaining, attracting, and advising female clients has experienced a modest rise, from 10% last year to 12%. However, research from Schroders identifies a significant disconnect in this area, with only 34% of women indicating that they would continue with their family adviser in the event of their partner's death.
Outsourcing
The survey results also revealed that, in response to Consumer Duty, 35% of advisers are looking to increase the use of outsourced discretionary model portfolios. Among those who do outsource, there has been a marked rise in expected allocations to multi-asset funds, rising from 27% to 35% compared with the same time last year.
Artificial intelligence
Artificial intelligence (AI) remains high on the agenda for advisers. More advisers are adopting AI, with only 10% stating they do not expect to utilise it, a significant decrease from 27% in May 2023. Additionally, the survey revealed that 21% have already implemented some form of AI technology.
Jamie Fowler, Head of Regional and Advisory Sales at Schroders, said:
“The market landscape has seen a number of shifts over the last 15 years, presenting challenging conditions for investors. It is particularly encouraging to see this year's results reflecting a renewed sentiment towards investing, with advisers increasingly focusing on equities and seeing opportunities especially within the UK. While clients are generally more bullish, a substantial proportion still remains neutral, highlighting the critical role of advisers in navigating ongoing volatility and enhancing clients' understanding of their investment choices."
Gillian Hepburn, Commercial Director at Benchmark, part of the Schroders Group, said:
"Celebrating the 15th anniversary of this survey offers a chance to reflect on the significant changes in our industry since 2009 when we were emerging from the credit crunch and in the middle of implementing the Retail Distribution Review[1].
“As an example, a key debate in 2009 was the use of a single platform where 90% of the advisers surveyed believed they could put all their business onto one platform. The platform market has matured significantly and the 2024 survey indicates that only 18% rely on a single platform for new business.
“This year’s survey also highlights the increasing impact of regulation on advisers and their businesses. Factors such as Consumer Duty, the Retirement Income Review, Dear CEO letters, and the emphasis on annual client reviews have all contributed to increased pressure and concern within the industry. At Benchmark, we believe that this has been a key driver for the growth in our adviser network during 2024.”
[1] Original proposal in 2006, final implementation 2012.
The full 2024 Schroders UK Financial Adviser Survey Report can be viewed here.
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