At last, after 15 months of the most tragic personal and economic circumstances brought on by the Covid-19 pandemic, I believe that we are now emerging into a new world of opportunity.
While we must not forget what everyone has gone through, the light at the end of this particular tunnel is getting bigger and brighter by the day, and the implications for financial advisers in particular are profound.
As we enter this new age of opportunity, with its expanding horizons, I would like to offer you three fundamental reasons why I believe the future is going to be exciting for the financial services sector in general, and financial advice specifically.
First and foremost is the pent-up demand for financial advice. We were well aware before the pandemic that there was a shortage of qualified financial advisers, with the number having fallen from about 250,000 when regulation started about 30 years ago, to around just 25,000 today.
Unfortunately, as the number of advisers has fallen dramatically, over the same period the cost of providing advice has risen significantly as the direct and indirect costs of regulation (such as professional indemnity insurance and the Financial Services Compensation Scheme) have grown exponentially.
The inevitable result is a huge advice gap, with millions of consumers who could have benefited from financial advice being, quite simply, priced out of the market.
Not an achievement that brings any credit to the succeeding regulators or governments who have stood by and let this happen. Nonetheless, it is a harsh reality that will cost future governments dearly in social benefits – something that could have been avoided if more attention and encouragement had been given to helping consumers to save and protect their families.
Secondly, the pandemic and the accompanying lockdown has changed all our lives forever, and none more so than that of those of providing financial advice.
During the lockdown, delivering financial advice remotely via Zoom, Microsoft Teams or even WhatsApp and FaceTime became the norm, with countless thousands of interviews and presentations, including mortgage transactions and complex solutions, completed successfully.
I saw a survey recently that said half of financial advisers plan to continue with remote working and, frankly, I expect that the actual figure will end up being significantly higher as many clients, old and new, are going to demand it.
Thirdly, as you reflect on the reasons I have set out above, I hope you can appreciate why their impact is going to be so profound for financial advice, especially for financial advisers, their businesses and their profitability.
That there is a shortage of advisers is beyond dispute, as is the fact that the cost of financial advice has had to increase because of the higher costs of regulation.
Now, as a direct result of the restrictions of the past year, advisers and clients have been forced to embrace technology in a way that would have been unimaginable before the pandemic.