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Frozen fees & soaring Ssas: the week in news

Frozen fees & soaring Ssas: the week in news

The virus crisis continued to grip the world this week as reported coronavirus cases hit 2.5m, oil plunged to its lowest level since 1999 and markets took another battering.

The industry is seeing the knock-on effects of the global pandemic as well, as UK-based funds saw their largest ever monthly net outflow in March and advice businesses could fail without extra funding. It’s time for the week in news.

1 Advisers in trouble

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Research this week suggested a hefty 14 per cent of advice businesses could fail due to the coronavirus if they are unable to secure additional funding.

The figures, from PanaceaAdviser, showed 18 per cent of advisers polled had asked for government funding while 14 per cent had warned that unless they were able to secure additional funding, their firm would not survive.

Derek Bradley, chief executive of PanaceaAdviser, said although advisers will have built up capital reserves in light of their regulatory duties, this may not be enough to allay the "gut concerns" of many advice businesses in the industry.

2 Investors flee

The crisis has also spooked investors, with a record £8.7bn pulled from UK-based funds in March. Morningstar estimates showed fixed-income funds led the outflows, with a net £5.5bn withdrawn, while alternative mandates continued to be out of favour.

Equities saw a relatively small outflow of £770m, but within the asset class investors fled active management to the tune of £3.9bn and instead piled £3.15bn into passive equity mandates. 

Research suggests advisers have bucked this trend, instead opting for active funds in the crisis.

3 Soaring Ssas

FTAdviser revealed this week that small, self-administered pension schemes have rocketed in popularity during the crisis thanks to their loanback feature.

Figures from Ssas provider Whitehall Group showed registrations in the first 10 days of April were almost eight times higher than figures reported for January.

Specialists say the spike is because Ssas can provide loan finance back to a connected business, up to 50 per cent of the total amount of cash held and the net market value of the scheme’s assets, which may look attractive in this economic downturn.

4 Frozen fees

It is not all doom and gloom however, as advice networks across the country have waived, frozen and deferred fees for member firmsFTAdviser has learnt.

Examples include Tenet, which has given its member firms an eight-week payment holiday from regulatory fees and PI insurance, and Sesame, which has suspended its tiered system of retention rates meaning firms will not pay more if income drops.

Openwork advisers will see the network’s regular support fees scrapped for three months while Quilter has offered member firms a three-month deferral on its network fees.

5 SPW’s lucky 11

In non-coronavirus related news, Schroders Personal Wealth has defied the pandemic and launched 11 offices in a bid to support its regional growth across the country.

The hubs, which are based in Birmingham, Bristol, Leeds and other UK spots, have been set up as semi-autonomous adviser businesses within the SPW network.