During the past couple of years I have been talking about a ‘golden future’ for financial advisers and I am now more convinced than ever that this is the case.
There are a number of very solid reasons behind this belief.
First, despite all the predictions, we now know the colour of the government for, hopefully, the next five years which should give us real political stability.
Second, the media and the public at large are becoming increasingly aware of the importance of seeking and taking sound professional financial advice. I understand there is also a growing recognition in government circles that the number of advisers available to provide consumers with high-quality financial advice is not as high as is needed.
I believe it is therefore becoming ever more likely that small and medium-sized financial advisory firms will start to see a regulatory dividend.
A small example of this is the recent announcement that capital adequacy requirements are now going to be based on a firm’s income, rather than the overly complex expenses-based test. In addition, the requirements are being delayed a further year to enable firms, particularly small IFA firms, to build what is now the relatively modest capital base required.
Moving on from these important structural areas of political and regulatory stability, along with a more supportive general environment, we can start to consider the massive opportunities ahead on an individual basis.
The starting point must be the new pension freedoms which, in the coming months and years, has the potential to transform the way all forms of savings are considered, in particular, of course, pensions.
At its most basic, more people are going to accumulate more money for their later life than ever before. This will create a veritable explosion in the demand for advice.
In addition, the generational cascade of wealth means that, excluding land, more wealth is going to be transferred to more individuals over the next two or three decades than in the past two thousand years.
Add to this mix the fact that auto-enrolment is now moving into the arena of smaller employers
To summarise, we have a stable political environment, greater recognition of the benefits of advice and an improving regulatory background to three fantastic market opportunities; pension freedoms, the cascade of wealth and auto-enrolment. If this is not the start of a Golden Age for financial advice I do not know what is.
Ken Davy is chairman of Simplybiz
