As the UK continues to battle with economical volatility, the need for advice will increase and more must be done to close the advice gap, according to Alexandra Loydon, director of partner engagement and consultancy at St. James’s Place.
Speaking to FT Adviser, Loydon said: “From a UK financial policy perspective, the focal point remains on bridging advice gaps while ensuring transparency and clarity for consumers.
“Policy proposals promising better access to advice without compromising consumer clarity are expected to materialise at some point in 2024.”
She explained that amid the uncertainties that 2024 holds, the role of financial advice emerges as “paramount" and said "the critical mandate remains unaltered”.
Loydon emphasised the importance to empower and equip individuals with informed decisions and offer trusted, tailored advice to "navigate the financial terrain and demystify the complexities of ESG investments".
“In a landscape marked by volatility and change, financial advisers have a responsibility to build trust and guide clients towards informed, resilient, and financially stable futures. And the need for advice will only continue to increase,” she said.
“ To quote Warren Buffett, we should all be going into 2024 not saving what is left after spending; instead spending what is left after saving. “
As we look towards 2024, there are likely to be further fluctuations and pivotal changes across the economic, political, and social spectrums.
Loydon explained that despite the hopeful prospects of a downward trend in inflation, weak economic growth might linger due to the delayed ramifications of interest rate hikes.
“The aftershocks of these shifts are expected to reverberate, particularly impacting borrowing and consumer spending behaviour,” she said.
Geopolitical implications from elections in key nations like the US, UK, and India, alongside ongoing tensions in regions like Russia-Ukraine and Israel-Gaza, could mean continued global instability.
She explained this will likely wield substantial influence, potentially reshaping international relations and policies and therefore having a knock-on effect on the economic environment.
Meanwhile, fiscal stability remains a pertinent topic for the industry, but she argued that financial services “barely get a mention” on the various political agendas, which could be seen as rather an omission in a year likely to be dominated on both sides of the Atlantic by important political events.
“The coming year also could also present an opportunity to build on the ESG regulations established in 2023, revamping ESG metric communications, evolving frameworks for delivering affordable, efficient advice, and harnessing the potential of emerging technologies,” she said.
“Technological advancements, notably artificial intelligence (AI), will of course continue in their rapid evolution, fundamentally reshaping financial services.
“The potential resurgence of digital currencies could mark a significant trajectory shift, demanding adaptations within established financial frameworks.”
Reflecting on 2023
Looking over the past year, Loydon said it stood testament to unexpected resilience in the face of economic uncertainties.
Contrary to widespread predictions, the forecast – and much-feared – recession failed to materialise.
She said this was largely owing to robust consumer spending bolstered by fiscal support.
However, she noted that amidst this resilience, turbulent world events, volatile markets, and persistent inflationary pressures left a mark on global economics.
“In the UK, according to SJP’s head of economic research Hetal Mehta, inflation remained a key focal point, with its persistent presence underscoring the challenges faced in managing the cost-of-living crisis.
“As such, significant policy shifts unfolded, spearheaded in the UK by the post-Brexit Edinburgh Reforms, a set of 30 policies aimed at creating an open, technologically advanced, and sustainable financial services industry.”
Loydon said there was also the implementation of the new consumer duty regulations.
Loydon added: “In a landscape characterised by market volatility, fluctuating inflation, unpredictable interest rates, and the cost-of-living crisis, the existing gaps in financial education and the need for financial advice has been magnified.”
She said one of the effects of the consumer duty regime’s implementation has been to reinforce the industry's commitment to prioritising clients' needs and fair value, while once again shining a spotlight on the urgent need for enhanced financial literacy.
Loydon also said last year will be remembered for the emergence of ESG regulations, notably with the introduction of the sustainable disclosure regulations (SDR) by the FCA.
“This framework sets the foundation for transparent labelling and disclosure within the investment industry, ushering in a new era of investment strategies aligned with sustainability, as well as broader societal goals.”
sonia.rach@ft.com
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