The future of financial advice – are you ready?
If we follow what happened in the UK with the ‘Retail Distribution Review’ in 2013 which ultimately meant the removal of upfront commissions for advisors and advisory firms alike, the only option available to them, was to change their business model(s) from one where revenues that were largely generated by products and services paying upfront commissions with no direct payments made by clients. To a business model that charges the client a flat fee of between 1% and 1.5% of their total holding that is being managed by their advisor or advisory company.
Coronavirus made 2020 and continues to make 2021 a difficult year for many industry sectors globally as well as forcing people to take stock of their lives and slow down. Being in lock down, working from home and ongoing restrictions has given investors a lot more time to review the advice they are being given in addition to reviewing the products they are invested in and the charging structures that are built into their portfolios.
Regular savings plans which were once the life blood of the industry have all but disappeared due to regulation and restrictions, pension transfers are coming under much scrutiny, commissions have and are being capped within products and structures and we are fast moving toward the final stage where financial advice becomes fee based as it did in the UK.
Some advisors and advisory firms will have been making this transition for a couple of years already and will fully transition without any issues. Others made a change to the services they provide and to who by moving away from ‘retail clients’ to offering advice to ‘certified HNWI and sophisticated investors’ who have the required capital to invest in more specialist products offered by specialist product providers.
For those who have not yet started either of the aforementioned changes, the future could be incredibly difficult. The RDR which changed the face of financial services in the UK forever began in 2012 and by 2015 more than 11,000 advisors had left the industry. These very same changes are now present in the offshore market.
If you are an advisor or advisory firm who are yet to begin transitioning or who would like to generate help with how to bridge the transition, we are able to discuss and provide information and products with how to do so.
Start a conversation today and contact us: investments@accruvis.com