Streamlining advice could be the key to attracting younger clients, experts suggest.
Steven Cameron, pensions director at Aegon, predicts a growth in streamlining financial advice. This comes as 58 per cent of advisers offering streamlined advice say they are interested in extending it, according to research from Aegon. The data also reveals that a third of those who currently do not offer it have expressed a future interest.
Mr Cameron says that with the outcome of the General Election creating uncertainty, the advice gap among savers and investors risks getting even greater. However, streamlining it will make financial advice more accessible. He adds: “At times of political uncertainty or market volatility, the demand for advice can only increase.
“One challenge we face as an industry is attracting younger people to seek advice and it’s encouraging to see that advisers believe streamlined advice may play its part in doing this.”
“However, when it comes to meeting increased demand, the outlook is mixed. Of the 37 per cent of advisers who currently offer streamlined advice, 58 per cent are in favour of extending its use. Of those who don’t currently offer it, future intentions are evenly split, with 38 per cent saying are interested in offering it, 32 per cent who haven’t made up their minds and a further 30 per cent who are not interested.”
The analysis also shows that when it comes to attracting a younger client base, nearly seven out of 10 of those surveyed think streamlined advice could be a useful method. This suggests that widespread availability can help close the advice gap and potentially build the foundations of lasting client relationships.
Aj Somal, chartered financial planner for London-based Aurora Financial Planning, agrees with this sentiment and says: “l think there is a marketplace for streamlined advice within adviser firms. It will help advice clients who do not need full financial planning, such as siblings of clients wanting to set up an Isa.
“With advances in technology, l think it is the way forward. However, there can be pitfalls, in that there is a danger for certain clients to get streamlined advice, whereas in fact they really should be getting full financial advice. It is for the adviser and the firm to make a judgement call on this.”
The Financial Conduct Authority is currently consulting on updating its guidance on an advisory service that meets a simpler or focused consumer need. But optimism for this sector relies on removing barriers to the future success of streamlined advice and 62 per cent of advisers quizzed cite regulation risk a barrier.
Mr Cameron adds: “The main barrier to advisers offering this is regulatory risk shows how vital it is that the FCA clarifies its expectations, so that advisers can extend existing propositions and develop new ones with confidence.”