The majority of advisers have seen their professional indemnity premiums grow and have found it more difficult to renew cover, according to Nucleus.
A survey by the wrap platform found half (52 per cent) of advisers said securing PI cover was more difficult this year, while six in 10 (62 per cent) said it had become more expensive.
Another business challenge identified by the survey was business growth.
The research found three in 10 respondents identified business growth and efficiency as their main concern, up from 19 per cent last year.
According to Nucleus, the fallout from the coronavirus may see this issue amplified over the longer term.
The platform had surveyed more than 180 Nucleus users between January and March 2020.
Barry Neilson, chief customer officer at Nucleus, said: "Our latest census has found advisers are increasingly concerned about their ability to sustain and grow their current capacity.
"But it has also shown they are increasingly looking for new creative ways to communicate with clients, which will enable them to increase the time spent on their business.
“From our census we also now have hard data on how difficult it is for advisers to find PI cover, both in terms of availability and affordability.
"The lack of options is clearly putting advisers and planners in a position where they need to spend excessive amounts of money on cover which could have gone to servicing their clients or on business development.”
The need for financial planning services was identified by 45 per cent of respondents as the main opportunity for their business this year, up from 39 per cent in 2019.
However, the research also found that time spent on compliance was the top driver of capacity issues, as half (51 per cent) of advisers cited it as a factor that limited their productivity.
Additionally, four in 10 (42 per cent) said an increase in demand for their services was putting a strain on their workload. A further 40 per cent attributed their capacity issues to time spent where automation should be in place.
On the theme of efficiency, three in ten firms said they were exploring alternatives to traditional face-to-face advice before the coronavirus, compared with a quarter last year.
Mr Neilson said: “Advisers’ experience through Covid-19 is likely to embed this shift towards virtual communication and allow advisers to more frequently check in with their clients, perhaps instead of holding one or two face-to-face meetings a year."
Piers Mepsted, managing director at Financial Advice Centre, commented: “In recent years no adviser could have escaped the increased amount of time required to address the administration involved in reporting, regulatory work and reporting to our regulator. This has also meant business leaders have had to evolve their business models to thrive and grow in this dynamic environment.
"Regulatory challenges and opportunities for efficiency should not be mutually exclusive. There are and always will be many plates to spin - but by seeing these challenges as holistic rather than a number of separate issues is really the only way to achieve the overall objective of growing our business."
He added: “Growing a business requires increased efficiency within the regulatory framework and by default, more compliance input. But this then ensures good business practices which attract positive outcomes at PI renewals. Most importantly it results in happy clients and more referrals. If advisers haven’t had at least some problems then it’s time to ask themselves if they are actually moving the business forward and making sustainable progress.”
chloe.cheung@ft.com
