Virus could trigger 'bigger exodus than RDR'

Virus could trigger 'bigger exodus than RDR'

One in five advisers predict the fallout from the coronavirus pandemic will prompt a greater exodus from the profession than that seen in the wake of the Retail Distribution Review, according to research collected last month.  

In a survey of 250 advisers almost 20 per cent warned the pandemic would result in more of their peers leaving the industry than those leaving after the RDR was introduced in January 2013. 

For respondents who had worked in the advice industry for more than 30 years, this increased to 33 per cent.

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It comes after the Financial Conduct Authority recently asked advisers for their "best estimate" as to how long they would remain in business if they had been negatively affected by the coronavirus crisis.

The research, conducted by financial services consultancy CoreData Research in June, also found 39 per cent of advisers expected the crisis to widen the advice gap in the UK. 

A survey conducted last year by the then trade body Libertatum warned the delayed impact of the RDR could see one in five financial advisers leave the industry through planned retirement in the next five years. 

In April FTAdviser revealed the number of IFAs had fallen last year for the first time since the RDR and 1,680 advice companies had de-authorised with the watchdog since 2015.

Matthew Aitchison, managing director at Clear Vision Financial Planning, said he could imagine some advisers faced increased stress as a result of the pandemic, alongside many business owners in the UK. 

He said: "This might lead to a few advisers accelerating their retirement plans, but I’d be surprised if it turns out to be as high as one in five."

Tom Morris, director at Ovation Finance, said he saw it as a positive that 80 per cent of respondents were either neutral or did not agree the pandemic would force more advisers out of the industry than the RDR. 

Mr Morris said: "The recent crisis has shown that good financial planning is more important than ever, and is therefore an opportunity for the profession.

"Lockdown has given all of us time to think about what is important, which is exactly what good financial planning can really help with.

"If we do see advisers exit this may be due to their own revaluation of what they want to be doing with their time and we may see some older advisers decide that now’s the right time to retire and do other things with their lives."

The data published by CoreData Research also found positives emerging from the pandemic, with almost half of the advisers reporting their relationships with clients had improved as a result. 

The majority, 58 per cent, said they had been communicating more with clients since the crisis. 

Craig Phillips, head of international at CoreData Research, said: "While the crisis has increased the need for advisers to communicate more often with clients, it has also called for them to heighten and refine the support they provide.