It’s planning time again! As one year ends and another starts, we look ahead to 2022 – we're planning holidays (covid permitting), special occasions, and perhaps even some business planning!
With this in mind, it can be helpful to know what other financial advisers are thinking.
To provide some insight, here are some of the key takeaways from our Annual Adviser Survey:
1. Key challenges
Each year we ask advisers to identify the key challenges they face going into the next year. ‘Regulation’ and ‘rising PI costs’, have ranked 1 and 2 for many years. However, the next biggest challenge has changed in a way that gives pause for thought.
In the 2020 survey, ‘finding new clients’ came in at number 3. This was hardly surprising. Advisers struggled to meet potential new clients face-to-face during lockdown, and much of their time was taken up with supporting their existing clients through the market volatility to ensure they stay invested.
The 2021 survey gave a different view with ‘finding new clients’ way down the list and replaced by ‘succession planning’.
Why the change? We constantly read about M&A activity, private equity providing ‘interesting’ business valuations, and consolidators on the acquisition trail. Is this simply an opportune moment for advisers looking to sell? Our survey highlighted that 43% of advisers have clients who have brought forward their own retirement date. Has the pandemic also caused many advisers to press the ‘reset’ button and rethink their future? Or are their responses a bi-product of the top 2 challenges – regulation and PI costs? Whichever way, the scale of this activity looks set to continue in 2022.
2. ESG and sustainable investing
COP26 has put climate change firmly on the agenda and 64% of advisers surveyed said that this would increase customer demand for sustainable investment products. 75% also indicated that they had seen an increased demand for sustainable investment options in the last 12 months.
In addition, 81% of advisers told us their fund selection process included ESG factors - a significant increase from 43% only two years ago.
However, 51% said that their level of confidence when talking to clients about terminology, regulation and ESG integration was ‘middling or below’. Hopefully the FCA consultation on a new taxonomy will help to clarify terminology and support a move towards greater consistency across the industry. Perhaps 2022 will also be the year for us all to work together to further increase both adviser and client knowledge in this area?
3. Outsourcing the investment proposition
Around two-thirds of advisers identified that they use some form of outsourced portfolio management with 21% making ‘extensive use’ and 16% expecting to increase their level of usage. The rationale for this remains the same: the ability to spend more time with clients and access to investment expertise and resources.
At Schroders, we are always happy to speak to financial advisers who would like to know more about Schroder Investment Solutions – our range of model portfolios and multi-asset funds!
4. Wealth transfer
As many of you may know, my favourite topic! One third of advisers continue to tell us that they have a specific proposition to target the transfer of wealth to the next generation and nearly 75% identify this as an opportunity.
However, 48% of advisers told us that the average age profile of their clients was increasing and the number who have a differentiated sales and marketing strategy for younger clients remains around 20%. Worryingly, the number of advisers taking on clients with less than £50,000 to invest has dropped to an all-time low of 39% so clearly there is still some work to do!
With all of the above in mind, I leave you with a new year gift from Schroders, our adviser toolkit:
- Annual Adviser Survey Report
- A practical guide to sustainable investing
- A practical guide to intergenerational wealth transfer
- How to PROD-proof your business
And our team are always happy to have conversations about succession planning!
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