In focus

Schroders’ 2020 Annual UK Financial Adviser Survey – the key takeaways

We’ve all been inundated with research surveys this year, but sometimes taking time to consider their findings can help with more than relieving Zoom fatigue. It can provide useful pointers that you can apply in the real world.

Here’s a summary of some key things that I took away from our recent Schroders’ Annual UK Financial Adviser Survey, that I think could help you with your business planning for 2021:

1. Regulation

The biggest concern for most financial advisers was regulation.

In response to the PROD regulations, which came into effect in 2018, the proportion of financial advisers who segment their client base has now risen to 66%. However, the majority of these advisers (69%) continue to segment their clients based on their assets under management rather than life stage or other factors.

Do you really believe that clients in later life require the same investment and service proposition as those in accumulation? I’m not convinced.  So perhaps it could be time to review segmentation?

2. Sustainable investing

74% of advisers now consider Environmental, Social and Governance (ESG) factors as part of their investment process, a massive increase from 43% of advisers last year. However, only 42% of advisers have high levels of confidence when speaking with clients on this subject.

Against a backdrop of increasing client demand and regulation that could mean you will have to take sustainability preferences into account during suitability conversations, could now be the time to upskill on sustainable investing? 

3. Adviser charging

43% of advisers said their advice fees were under pressure.

It’s hard to walk along the high street without seeing a shop with a sale sign - we are living in a cut price world. Platforms, asset managers and DFMs are also coming under pressure to reduce fees.

For the first time since 2014, not one adviser reported ongoing charges greater than 1%. The proportion charging between 0.75% and 1.00% was lower than last year and the proportion charging between 0.50% and 0.75% increased correspondingly.

With the trend in fees on a downwards trajectory,  it’s worth considering how this might impact your business.

4. New clients

Finding new clients was one of  the top three areas of concern for advisers. It’s no surprise that many advisers have spent more time than usual servicing existing clients during this challenging year. However, 43% reported that they have spent less time than usual on activities to attract new clients. This comes at a time where 24% of advisers report an average client age of over 65 and 67% report an average client age of over 51.

Could this be another reason to look at client segmentation by life stage?

As older clients move into drawdown or pass away, the assets of your business can deplete.

While almost 80% of advisers believe that wealth transfer is a significant opportunity, only 20% have a strategy in place to attract the next generation of, currently lower value, investors.

Perhaps you could start planning a next generation wealth strategy for your business if you haven’t yet done so?

5. Women investors

Continuing the wealth transfer theme, two-thirds of ‘baby boomer’ wealth is currently held within couples and the first point of wealth transfer is typically from husband to wife. Worryingly, around 75% of women will move financial adviser at the point of inheriting, yet less than 10% of advisers had a differentiated strategy for attracting, retaining or advising women - particularly divorced or widowed.

Is this potentially the biggest business opportunity for your business plan in 2021? 

In short, our Annual Adviser Survey has highlighted some of the opportunities and challenges that you face. Perhaps the New Year is the time to review your business strategy in some key areas?