Your IndustryJun 11 2020

Keith Carby: Advisers need to adapt

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Keith Carby: Advisers need to adapt

As evidenced by the demographic averages for length of service, income and practice valuation, regulated financial advisers were in good shape immediately prior to the arrival of Covid-19.

A very high price had been paid to achieve this position. Over several decades the UK adviser population was subjected to its own version of natural selection. Only the ‘fittest’ survived (fittest in the Darwinian sense of adapting well to environmental change).

For the short and the medium terms, the advisory sector is in for a tough time

The principal environmental changes had been due to regulation and associated developments, namely: the requirement for professional standards; interventions on remuneration; the shift towards restricted status; and the trend towards aggregation.

The survivors might reasonably claim: ‘What didn’t kill us made us stronger.’ Without doubt they proved they possessed resilience (in all senses).

So, can we now assume that this invaluable attribute will be enough to help advisers emerge from the pandemic even stronger still? 

Hard times

There is no need here to list the scale and nature of damage currently being done to the British economy and to all of financial services. Being realistic, for the short and the medium terms, the advisory sector is in for a tough time.

Realism is not the same as negativity. It involves considering pluses as well as minuses. And there are several pluses. 

The mass affluent will now be keener than ever to put their finances in order. They will want to recover what they see themselves as having ‘lost’ and they will want to be better protected. 

Key points

  • Advisers had to adapt quickly before Covid-19 struck
  • They can use imaginative ways to take their business forward, and survive, using technology
  • Resilience is important at this time

In scale and in intensity, therefore, we can reasonably expect increased demand for the services offered by regulated financial advisers.  

However, for a variety of reasons (and perversely in such market conditions), adviser earnings are likely to come under increased scrutiny.

If that happens, it is probable that generating strong profitability (and capital value) will require advisers to do more than just rely on their ability to stick at it. Qualitative changes will be required.

Over the past couple of months I have discussed this at length with experienced owners, directors and managers of advisory firms, as well as with individual advisers. There was widespread agreement about the following:

• Client communications

Most advisers are excellent at face-to-face communication. However, they are not so good at systematically and productively communicating with their entire client bank.