The lang cat consultancy recently released the annual ‘State Of The Advice Nation’ report. Conducted in late 2024, the research took the temperature of the regulated advice market through talking to 500 members of the profession.
Most advice firm owners are feeling positive, reporting higher turnover in 2024 (80%), with more than two-thirds anticipating higher profits for the year ahead. This is the most positive outlook detected since 2021, when post-Covid money rushed into investments alongside strong market performance.
Unease amid the optimism
Impinging on the optimism are various concerns keeping advice practitioners awake at night. The most cited element is worry about changing regulations (31%). The second (15%) is around staffing their business, and finding the right people to join them. Close behind is disquiet about growing their business (13%).
The general consensus is there is too much regulation, and it is increasingly difficult to stay on top of it. For smaller firms, the vast majority in the regulated advice market, this is undoubtedly an issue.
Homing in on Consumer Duty, now embedded across the sector, some frustration was clear. Just over 20% rated overall progress with consumer outcomes as being a waste of time. For the Consumer Support outcome of the Duty, this leaps to 43%, with a significant proportion considering this is all about firms monitoring if clients feel they are getting the support they need. There is a growing sense that this regulation has not delivered the intended positive change, or made an impact in the right places.
Pressures on the profession
Energy levels appear to be low among the profession. When requested to encapsulate the past year in a word or phrase, “challenging” and “busy” were the most prominent responses. Drilling down to the biggest challenges confronting firms, ‘profitability in the context of compliance/regulation/economic pressure’ came a slight second (27%) to ‘provider inefficiencies’ (29%).
On the topic of inefficiencies, many respondents stressed the need for tangible support from providers regarding familiar key issues such as pension transfers and Letters of Authority. Positive change in these areas would benefit consumers, firms and the wider industry.
The consolidation of advisory businesses continues to exercise minds. Investigating future advice business ownership, 15% of owners expect to sell to a consolidator within the next five years. This proportion rises to over a quarter for those nearing retirement, an increase from the previous year’s results of around one in five.
Not far behind, 12% think their firm will be run via a management buy-out or employee ownership trust. Yet the vast majority, more than 60%, believe they will still own their business in five years’ time.
Newbies and paraplanners have their say
In a first for this market study, newcomers to the profession have been specifically targeted. The main impulse for this choice of career is the opportunity to help people (41%), followed by an interest in financial advice (31%) and an almost identical number pointing to the clear career path in prospect. Three-fifths were pleasantly surprised by the people in their firm.
On the other hand, when asked about any unpleasant surprises encountered since starting in this field, 62% specified the regulation and bureaucracy they had to contend with, and even more were taken aback by the amount of paperwork still in play (65%).
For the second year in a row, the research also focused on the opinions of paraplanners, including on how their roles are perceived by others in the sector. They still consider the regulator should build a better understanding of their function: 38% feel a net negative regard from the FCA. Quite concerning is that one in five deem they are held in low regard by those running the profession. This is up from 15% the previous year.
In terms of the biggest blockers to paraplanners progressing their daily workload, provider admin tops the list for 46% of those asked. Interestingly, AI is viewed positively in the main as a work enabler and not a threat to their jobs.
Written by the lang cat
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This article is issued by Liontrust Investment Partners LLP (2 Savoy Court, London WC2R 0EZ), authorised and regulated in the UK by the Financial Conduct Authority (FRN 518552) to undertake regulated investment business.
This information and analysis is believed to be accurate at the time of publication, but is subject to change without notice. Whilst care has been taken in compiling the content, no representation or warranty is given, whether express or implied, by Liontrust as to its accuracy or completeness, including for external sources (which may have been used) which have not been verified.
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