Advisers are dedicating most of their time to administration tasks and compliance at the risk of client service, an investment consultant has warned.
An adviser survey from Square Mile Investment Consulting and Research found advisers ranked admin as the greatest demand on their time at work, followed by dealing with compliance.
Time spent face-to-face with clients ranked third, despite 39 per cent of the advisers saying meetings in person with clients were the most effective means of communication.
Mark James, client relationships director at Square Mile, said: "This highlights an obvious disconnect: advisers’ administrative burden prevents them providing greater value-added services to their clients."
However, the survey of 133 financial advisers, which was carried out in September, also identified a growing trend of advisers outsourcing regulatory services to third parties as a means of navigating the growing burden.
Mr James said: "If advisers are spending the majority of their time meeting regulatory requirements, then it is less time in front of clients which is where they earn their fees.
"One way in which advisers have tweaked their business model is they have realised this is an area where they can save time by bringing experts into the business. This is the biggest trend we have seen, advisers are no longer doing it themselves."
Recent years have seen a number of market-changing regulatory requirements enter the market, including the Markets in Financial Instruments Directive (Mifid II), the General Data Protection Regulation (GDPR) and the upcoming Senior Managers and Certification Regime set for implementation in December.
These rules have demanded more time and energy from advisers, in particular those in small and medium sized businesses without a dedicated compliance department.
Earlier this year the Chartered Institute for Securities & Investment warned Mifid II, which requires financial services firms to disclose a breakdown of all costs and charges associated with a client’s investments, was estimated to have added 20 minutes of administrative time to each client meeting.
Mr James said outsourcing was also becoming commonplace for investment processes, with fewer than half, 44 per cent, of advisers in Square Mile's survey now running their own centralised investment services.
But he admitted outsourcing did carry an element of risk, namely diminished control and an additional cost either directly to the adviser or the client.
Square Mile's findings are of a similar sentiment to those published by Nucleus in May, when the platform warned the number of advisers spending 40 per cent of their time on administrative tasks had tripled in a year.
Nucleus also found advisers were struggling to find enough time to service increasing client numbers, saying only one in seven advisers spent more than 40 per cent of their time with clients, down from one in five last year.
rachel.mortimer@ft.com
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