Your Industry  

Advisers split on desire and ability to expand: research

Advisers split on desire and ability to expand: research

Advisers are split down the middle on whether or not they plan to expand their businesses to take advantage of new opportunities, according to new research from Adviser Home.

The IFA resource website asked its members about the supply of advice in the UK to coincide with the ending consultation period of the Financial Advice Market Review. Of the 120 advisers that replied, between 50 and 60 per cent said they do not plan to increase their adviser numbers.

When asked why, 24.2 per cent said they were concerned about the costs of running the firm, while 20 per cent expressed concern at the risks taken on when giving advice.

Of those that do plan to expand, 27.5 per cent told Adviser Home that they see evident increased demand for their services, while 23.3 per cent want to be more profitable, so plan to invest in their infrastructure to support more business.

The research also asked whether firms could increase without new advisers, with 48.3 per cent believing they could work on improving overall productivity, 40 per cent reckoning they could instead use, or increase their use of paraplanners, and 28.3 per cent stating they could increase face-to-face client time by outsourcing aspects of their business.

Brendan Llewellyn, director at Adviser Home, told FTAdviser that the value of paraplanners could be “crucial to materially increasing the supply of advice in the UK”, adding that outsourcing aspects like technology, compliance or discretionary fund management may also help.

“The other major barrier to adviser expansion is regulation, cited by our members above things like access to capital, new technology or advisers to employ.”

The research found that documenting client investment plan and creating the suitability report was the most time consuming element of the advice process, closely followed by valuing and assessing existing plans.

When asked about whether automated systems might help free up their time, there was a “genuine enthusiasm” for using technology, according to Mr Llewellyn. However, when the conversation moved on to ‘robo-advice’, the term polarised respondents.

“Those who are against robos were staunchly so, while those who weren’t were largely agnostic, stating that they’ll wait to see what the propositions look like and whether the regulator will give any more clarity on what the liabilities are.”

The research’s sample group were generally smaller advisers, according to Mr Llewellyn, generally firms of between three and 10 advisers.

In terms of how these businesses segment consumers, 30.8 said that they did not and it all depends on what the service is. The second most popular response - 28.3 per cent - was that they segment clients with an investable wealth of £100,000 or more, with 24.2 per cent saying they segment above £50,000 worth of income.

However, income did not even rank on the list of factors that determine the clients that advisers deal with. On this metric, level of wealth was deemed the most important, followed by personal relationship and then professional connection or client referral.