UK: Majority of advisers optimistic about proposed pension reforms, but regulatory costs still a worry

• Two thirds (64%) of advisers have increased the size of their active client base
• A third (35%) of advisers looking to hire new staff in the next 12 months
• Majority (86%) of advisers think proposed pension reforms are positive
• Regulatory fees remain the biggest concern for half of advisers (48%)
• 34% of investment advisers considering an online solution for lower value clients
• 56% investment advisers use three or more platforms

Advisers are largely optimistic about the proposed savings and pension reforms and the advisory market in general, according to the latest Adviser Barometer from Aviva. A growth in the number of customers receiving advice, together with an increase in adviser firms looking to hire new staff provides clear signs of positivity in the market.   

The study of more than 1,500 advisers found that almost two thirds (64%) claim to have seen an increase in the size of their ‘active’ client base, which is a significant increase from 28% in September 2013.  The bulk of their clients are new to the market (43%) rather than former clients of other advisers (34%). There also appears to be potential for growth in the size of adviser firms, with 35% of advisers expecting to hire new staff in the next year, and only a small minority (4%) thinking of leaving the industry.

The majority (86%) of advisers think the proposed package of savings and pension reforms will have a positive effect on the advice market, and almost a half (46%) say they are likely to offer a broader range of products to their customers. At least four out of five advisers predict they will see an increase in demand for advice amongst those aged 55 and over.

However, regulatory fees and levies remain the biggest concerns for the largest proportion of advisers (48%), with professional indemnity costs (43%) and ‘remaining profitable’ (42%) running close behind.

Adviser trends

The survey results show that 79% of advisers are now offering independent advice, a fall of 5% over the last 12 months (84% in March 2013), and 15% are offering restricted advice (up from 10% in March 2013) – a clear shift from independent towards restricted advice. Network membership remains static at 37%, although there is a slight drop in service provider membership from 20% to 17%.

Platform changes

Overall, advisers seem happy with their chosen platforms, with only one in eight (14%) thinking about changing their main platform in the next 12 months.  Over half (56%) of investment advisers say they use three or more platforms, with most placing more than 60% of their new business through the platforms.

Over two thirds of investment advisers intend to transfer most of their total assets under management (AUM) onto platforms in the next three years. However, only a third of advisers have currently transferred this amount onto their platforms, showing there is still likely to be a significant growth in platform AUM in the coming months.

Of the advisers who are considering moving their main platform, functionality remains the number one driver for change (71% March 14 vs 61% Sept 13). Cost (68% March 14 vs 53% Sept 13) and value for money (69% March 14 vs 49% Sept 13) are also cited as important factors in the decision making process.

Opportunities

When it comes to opportunities, two thirds (66%) of all advisers identified the budget reforms as one of the greatest opportunities in the advisory market just now, with a similar number (64%) looking to actively pursue these openings. Growth in ‘at retirement’ (60%) and low interest rates increasing the need for financial reviews (34%) were also identified as likely prospects amongst this group. 

One of the clearest opportunities identified by investment advisers is offering an online solution for clients with less investment income (34%).

Andy Beswick, Aviva’s intermediary director, retirement solutions, said:

“After the retail distribution review (RDR), the savings and pension reforms announced at this year’s budget are the biggest change to happen in the advice market in recent years and this has presented advisers with some interesting opportunities.

“What our research has identified is a clear shift in advisers’ attitude in the last six months. There appears to be an upturn in the number of advisers joining the market, growth in the number of ‘active’ clients being serviced, and a real expectation that there will be an increase in demand for advice amongst those in the over 55 age group. A growing number of advisers are already looking to broaden their range of services to meet their customers’ changing needs in this new era.

“Clearly, advisers still have concerns about regulatory fees and levies, but despite this the results of the latest survey show the most optimistic picture for the advisory market since we started tracking adviser opinions in 2009.

“Aviva has a key role to play in supporting advisers and we will continue to deliver practical solutions and support to help advisers take advantage of these new opportunities.”

- Ends -

Methodology

Research conducted by Aviva between 26 March – 2 April 2014, 1503 responses received via online survey from all Aviva advisers.

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