A total of 70 per cent of advisers consider Brexit and broader political volatility as a key threat to the market, Aegon has revealed.
According to Aegon’s Adviser Attitudes Report, two in five, 40 per cent of advisers have voiced concerns that Brexit could hurt their business, while 70 per cent see Brexit and the broader political volatility as a considerable threat. Twenty one per cent, however, see Brexit as an opportunity.
One in five, 17 per cent expect growth to be ‘significant’ as they capitalise on emerging advice opportunities such as defined benefit to defined contribution transfers.
Considering the biggest opportunities for the advice market over the next two years, over half, 53 per cent of advisers identify DB to DC transfers to be a key area of growth. The promise of pensions dashboards was cited by 26 per cent of advisers as improved access to information about savings may prompt demand for pension planning and advice. A further 21 per cent of advisers saw social care funding as a key opportunity for growth.
As the pension freedoms become firmly established, 76 per cent expect the number of clients that their firm services to grow over the next 12 months, while five per cent predict that this will fall. In order to prepare for expected demand, 28 per cent of advisers believe they will grow their team to meet it over the next 12 months.
Moreover, the increasing presence of robo-advice is another area that divides advisers, 31 per cent expect to see more demand, while another 31 per cent see it as a threat. Regulatory change was also a concern for advisers, with 23 per cent noting that Mifid II is introducing further future uncertainty.
Aegon added that when considering yearly profits, 75 per cent report a profits increase over the past year and 77 per cent expect to see profits grow in the next 12 months. This is similar for annual turnover, with 81 per cent noting turnover has grown and expect this to continue over the coming year.
Aegon UK pensions director Steven Cameron said: “From RDR to advising on the pension freedoms, the UK’s financial advice market has been buffeted by its fair share of regulatory headwinds in the past decade, but has emerged stronger and more sustainable; as too have the firms that have proven they can adapt to meet the opportunities change brings. The government’s pension freedoms have given more financial responsibility to individuals approaching retirement, making the role of the adviser a fundamental backbone of our pension system.
“In our increasingly complex market, it’s important that people seek professional financial advice whenever making significant and life-altering decisions, so it’s encouraging to see that advisers are indeed seeing this growing need reflected in demand. Consumers face increasing choices but there are also significant challenges to be overcome in providing for their financial futures. This is especially the case with the ongoing decline of DB and in this new era of pension freedoms. For those advisers that can stay ahead of the curve, all change should be seen as an opportunity to demonstrate added value to both current and prospective clients.”
Personal Finance Society CEO Keith Richards added: “Advisers have good reason to feel positive about the future. Not only is consumer demand for their services continuing to increase, more and more people are recognising the value they bring and even the UK government has mandated regulated advice within their own pension legislation for safeguarded benefits over £30,000.
“Evidence of demand was already present prior to the announcement of pension freedoms as consumers realised the challenges of investing alone in a near zero interest environment and the economic uncertainty ahead. Pensions freedoms has undoubtedly increased demand further for regulated advice opening up a range of new client opportunities for firms with extra capacity. It also provides the advice sector an opportunity to establish an important role in the public’s best interest more broadly going forward.”