Money Marketing: Preparing for the ‘great adviser retirement’

By: Benjamin Cooper, Head of Asset Management Partnerships, IFA and Wealth

Financial services is set for a seismic shift, as the ‘great adviser retirement’ gets closer.

Recent research from the Financial Conduct Authority revealed the number of younger advisers has fallen in the past 18 months, while the number of advisers aged over 60 has grown nearly 30%.

To ensure a smooth transition for clients, advice firms must think carefully about succession planning.

Without the right structure in place to give clients the needed reassurance, they risk losing credibility – or, worse, business.

The drivers

There are several catalysts driving advisers into early retirement, including increased regulation, emerging technologies and market volatility.

The regulatory landscape’s rapid evolution is perhaps the most pressing.

Over a year on from Consumer Duty coming into effect, there is growing recognition the regulation will require a real ongoing effort – a burden that has prompted some advisers to rethink their futures in the industry.

The ever-growing demand for hyper-personalisation across the wealth management experience is also fueling this trend, particularly as we continue to see wealth transfer between generations.

Coupled with market volatility, inflationary pressures, high interest rates and geopolitical tensions, advisers are faced with challenges in how they interact with and support clients – all while delivering outcomes that meet their financial goals.

Investment flexibility will be a cornerstone for meeting the diverse needs of all generations, and technology will be key to delivering that. As advisers evaluate their value propositions for the future, considerations for scaling their businesses should be at the forefront.

The solutions

As firms plan to get ahead of the great retirement, there are two key factors to consider: talent and business strategies.

First, attracting new talent should be an industry-wide focus. Many advice firms are leveraging new technologies to attract new recruits and establish training and development schemes to ensure they’re equipped with the skills and knowledge to pursue a career in advice.

Secondly, as balancing client needs with business needs has become increasingly difficult, advisers must look to solutions that can help them drive their strategic growth agendas.

Building a digital-led solution will not only remove the need for manual administration but enable the modern adviser to engage with clients in a personalised and dynamic way.

Elsewhere, while the adviser-as-a-platform solution has been much discussed, the adviser-as-DFM is increasingly being considered. Obtaining permissions and launching a discretionary investment management business can enable better client and adviser experiences – and better client and business outcomes.

Owning a DFM can help improve alignment across clients’ needs and investment advice by giving advisers more control over their advice implementation, while also providing increased flexibility around charging structures.

Consent to make tactical changes to client portfolios may not be required, improving efficiency. In addition to potentially boosting enterprise value and the potential sale prices of advisers’ businesses, launching a DFM can create new revenue streams that provide capital to invest in developing the next generation of advisers.

Firms looking to solve the needs of the future generation of investors and advisers must act now.

Having the right technology, products and propositions in place will allow them to foster deeper relationships with clients, reduce administrative burden and focus on what really matters most: providing quality advice.

Important Information

The following information can be sourced to the Financial Conduct Authority:

• The number of younger advisers has fallen in the past 18 months, while the number of advisers aged over 60 has grown nearly 30%.

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