Advisers should focus on specialising in order to unlock growth in 2021, according to an Octopus top boss, as more niche areas of advice are forecast to boom.
Ruth Handcock, chief executive officer of Octopus Investments, told FTAdviser that 2021 was the year advice firms could “get back to growth”.
But she added this growth would “perhaps not always be in the traditional sense of simply looking for new clients”.
Ms Handcock said: “Instead, I think we will start to see increasing numbers of firms looking to drive that growth by focusing on specialist areas as they look to differentiate their offering.”
Sustainability
One of the “greatest areas of opportunity” for advisers looking forward was around sustainable or impact investing, Ms Handcock said.
She added: “Part of this is down to the shifting demographic of advised customers. Some millennials are now in their late 30s, with well-paid jobs, mortgages, and an increasing need for advice.
“We also know that this is the generation which cares more about where their money is invested than any before it, a trend that is only going to continue.”
ESG investing has boomed in popularity in recent years as fears over climate change have led investors to consider the impact of their money and as a growing number of millennials have begun investing.
Recent data from the Investment Association shows inflows into ESG funds have quadrupled in 2020 so far, with £7.1bn invested in such funds in the first three quarters of this year compared with £1.9bn last year.
Ms Handcock said: “Clearly, the desire to make a positive difference with your money now extends well beyond the younger generations but, if you are an adviser looking to position your business for long-term growth, a clear specialism in sustainable and impactful investing is a huge opportunity to stand out and attract younger new prospective clients.
“This opportunity will be accentuated by the great wealth transfer, as trillions are passed down to younger generations with millennials likely to be one of the main recipients.”
The wealth transfer in itself presented an opportunity, Ms Handcock said, as advice firms could provide a tailored service to cater specifically for multi-generational families.
Taxing times
According to Octopus, advisers have a “real opportunity” when it comes to tax planning.
This could help generate referrals from accountants and solicitors, who regularly come across clients in need of expert tax planning advice.
Ms Handcock said: “We know from our own research that clear specialisms are important when accountants and solicitors are deciding which advisers to work with, and referrals are often the kind of ‘high value’ clients that most firms are looking for.”
Using tax advantaged investments could also enable advisers to unlock growth from their existing client base, she added.
Ms Handcock said that conversations with clients looking into inheritance tax could often end up providing greater visibility of a client’s entire estate and was a “natural” opportunity to engage with family members, whether elderly parents or their adult children.
She added: “That’s why increased expertise in this type of planning can be incredibly valuable for advice firms looking to grow their assets under advice organically, without actively seeking out brand new clients.”
imogen.tew@ft.com
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