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Vanguard: Advice is in a ‘very good place’

Vanguard: Advice is in a ‘very good place’

The advice market is in a “very good place”, according to Vanguard’s distribution boss, as it boasts long-term prospects which provide advisers with a “fantastic opportunity” for growth.

Neil Cowell, head of UK distribution at Vanguard, told FTAdviser that after an eventful year, it was “important to be clear” that from a long-term perspective, advice was in a “very good place”.

He said: “Assets under advice have increased from £64bn in 2008 to over £500bn today. The majority of that has been down to an expanding market, and there is still more demand for advice than their supply, especially at the lower end of the market.

“This growth in demand is being driven by major, structural changes — we are entering a world of longer lives and lower returns.”

Mr Cowell said this backdrop, coupled with the complexities of pension freedoms and student debt, was an opportunity for financial advisers who “get it right”.

He added: “Now and in the future we will need to get people started investing in their 20s and keep them invested into their 80s and 90s. 

“A growing number of people now approaching their mid-40s are doing so without having a defined benefit pension and still paying off student debt. 

“Inevitably, people will need help navigating these complexities. For financial advisers that get it right, it’s a fantastic opportunity for growth.”

At the start of 2020, Vanguard announced it was to enter the UK advice market in a bid to “evolve to meet changing investor needs”.

The asset manager received regulatory permissions from the Financial Conduct Authority to provide retail advice in the UK and is developing a proposition to launch in the future, but no timescale has been revealed.

At the time, Vanguard stressed the firm’s belief in the importance of fee-based financial advice and claimed financial advisers would “always play an important role” in providing wealth management services to investors who wanted a more personal service.

The fund house already runs a number of advice services — from hybrid in-house services to digital options — in the US, but FTAdviser understands the new offering will be "bespoke to the UK" based on the needs and preferences of UK clients.

Mr Cowell said the value of advice had been highlighted this year amid the unprecedented volatility of markets during the coronavirus pandemic.

He added: “We’ve often emphasised the value advisers add by serving as behavioural coaches for their clients. Nowhere is that clearer than, for example, in March, where we say the fastest bear market in history.

“Being able to act as an ‘emotional circuit breaker’ for clients and keep them on track is a tremendous benefit that advisers bring.”

Vanguard attracted strong net inflows across its product range from investors and advisers alike throughout the year, with UK advisers opting for its popular ‘Life Strategy’ range.

It also launched a Vanguard Portfolio Services team in a bid to help advisers develop an effective, cost-efficient investment proposition.