- Low interest rates increasing need for reviews, seen as top opportunity
- Advisers are increasingly worried about how to remain profitable
- One in five advisers unlikely to meet capital adequacy requirements
Four months after the implementation of the Retail Distribution Review (RDR), advisers are optimistic about the future, with 90% of those surveyed still intending to remain trading at the end of 2013.
The latest Adviser Barometer from Aviva* has found that advisers are finding opportunities in a variety of different economic, market and regulatory changes.
Almost half (44%) see the current low interest rates as the main opportunity - smaller firms in particular are looking to carry out additional reviews to support clients in this environment - while over a quarter (28%) see growth in workplace savings due to auto-enrolment. Other emerging opportunities include the growth of the at-retirement market, reduced competition post-RDR as advisers leave the market and orphaned clients.
Continuing concerns
However, advisers are still concerned about how to remain profitable – and that concern is growing. Over half of advisers (52%) say they are concerned, compared with 47% a year ago, in the Adviser Barometer of March 2012.
Other top concerns all relate to costs and income. Paying for regulatory fees and professional indemnity costs worry 44% and 42% respectively, while new rules on legacy commission (36%) and how to generate revenue and recurring income (31%) round out the top five.
Advisers are also becoming increasing concerned about economic uncertainty, with 31% listing it as a worry, compared with 23% a year ago.
Capital adequacy
Another potential area for concern is meeting new capital adequacy requirements. While 59% of advisers already meet the rules and 20% have plans in place to meet the requirements within the FSA timescale, 7% so far have no plans in place to meet them and 1% believe they will not be able to meet the requirements within the timescale. A worrying 13% say they do not know what the requirements are.
Andy Beswick, intermediary director at Aviva, says:
“Advisers are increasingly worried about the economic environment, which is not surprising considering recent news, such as the IMF downgrading the UK’s growth prospects.
“But they are also looking at how to best support their clients with advice on how to handle this environment. Advisers told us that the current low interest rates increase the need for financial reviews. Also, post RDR more people will be in need of independent financial advice.
“Smart advisers will see opportunities where others may see challenges.”
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