March 8, 2019
From Brexit to MiFID II, this year promises to throw a few curve balls the way of the financial services industry.
We sat down with four award-winning advisers from across the financial advice landscape to canvass their views on the challenges and opportunities that lie ahead…
Verona Kenny: Head of Intermediary, Seven Investment Management — helping individuals manage their capital.
Dr Kathryn Knowles: Managing Director, Cura Financial Services — helping individuals with pre-existing medical conditions find the right life insurance.
Susannah M Gray: Managing Partner, Sorbus Partners — supporting and assisting families by managing their wealth.
Andrea Solana: Head of Advanced Planning, MASECO — providing expert guidance to Americans in the US and abroad, UK residents and financial advisers.
Verona Kenny: The world for people approaching retirement is unrecognisable compared to less than a decade ago. Old certainties are gone. Pensions freedoms along with the safety net of the Government Actuary’s Department (GAD) limits to govern drawdown have changed the advice that used to be given to clients approaching and in retirement.
Overlaying the need for advice for retirement with MiFID II and its UK cousin PROD means there are new responsibilities on advisers for disclosure and client suitability.
Susannah M Gray: It would be very easy to suggest Brexit uncertainty and any ensuing changes to regulations. However, navigating regulatory minefields is something that is inherently part of what we do. We face increased accountability at senior levels with the SMR (Senior Managers Regime), and whilst this obviously could be viewed with interpretation, it can also be seen as a huge positive. Change in the industry is being accelerated by increased qualification requirements and higher standards of knowledge and professional integrity. Yes, it’s a little burdensome for firms that operate like this already but you have to view it as a positive. It echoes the changes we are noticing with our clients, who increasingly expect incredibly good core skills on top of good investment performance. They want to work with trusted professionals with the ‘soft skills’ to understand them and their family dynamic and the ability to plan cohesively and implement harmoniously.
The greatest challenge for financial advisers in the future is the move from numbers to people.
Kathryn Knowles: I think a big challenge in the UK, has to be the uncertainty over Brexit. People are scared, we don’t know what it’s going to mean for job security and the value of our currency. We’re all in limbo. People are torn; they want to save money and get rid of expenses that they see as a luxury, and insurance can fall into that category. It can be hard to assign budget to pay for insurance, of a potential worst case scenario, when you have an immediate need for that money each month. As an insurance adviser it is my job to help people create a balance to protect their financial resilience, and match that with an insurance that they can afford. It’s important that we support clients in options that they feel comfortable with. We need to tell them what they need, find a solution that they can afford and educate them in the value of the insurance.
Andrea Solana: I think two of the biggest challenges facing financial advisers are managing client expectations and articulating a unique proposition to the marketplace. With generally strong equity market returns and low interest rates over the last 10 years following the financial crisis, many clients have unrealistic expectations when it comes to returns for a given level of risk held within the portfolio.
It is the role of the financial adviser to help the client understand their requirements alongside their risk tolerance and time horizon and to understand market cycles and the importance of staying the course.
Additionally, with so many financial advisers out there, it is important to be able to clearly articulate the value that you bring to the table in the relationship and why your firm is best placed to help them achieve their goals and objectives.
Verona Kenny: As is often the case, the biggest challenge is also the biggest opportunity and this is definitely the case for those advisers and providers who are focussing on supporting clients approaching or in retirement. The need for advice has never been greater and the most critical time that a client needs advice is when they plan for their retirement. Advisers and those providers who can support the provision of a Centralised Retirement Proposition have a huge opportunity in this market but getting the detail right is critical, there is no room for error when dealing with a client’s life savings.
Susannah M Gray: I believe that building on and exceeding core skills creates the biggest opportunities. As a result we’ve decided to work with the CEDR (Centre for Effective Dispute Resolution), the most experienced mediation practitioners in the world, to develop a course specifically focused on private client advisers to provide meaningful training and an accreditation in helping individuals and families navigate the issues that having significant wealth can create. We consider this a meaningful and weighty gap in the training and skill sets that are currently available in the market and are delighted to be part of solution to this. We see the need for these skills as an increasing trend in this sector not only for 2019 but for the long term.
Kathryn Knowles: A huge opportunity has to be social media and engagement. People are dabbling in it, some are doing well, some are missing the mark a little bit. The main thing is to try. Having social media and putting posts out there is one thing, but it’s the content that really stands out.
People don’t want a sales pitch on social media, they want information and fun.
Andrea Solana: One of the biggest trends within the sector is open banking and the increased use of APIs to provide avenues for different platforms and software to aggregate information and work together. If the customer experience can be made more efficient and innovative, this creates a differentiator for your firm and if technology can make back office operations more efficient then any increased cost pressure on the sector is less likely to materially impact business profits.