Financial advice opportunities and threats

Abigail Spencer Uncategorised

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In today’s world, change is a constant. And in financial services, advisers face many different challenges to win new clients and service existing clients efficiently and profitably. However, delivering this service level to clients can be time consuming and expensive. This is often driven by the Government or regulators introducing new policy initiatives or changing rules and regulations.

Change creates huge opportunities for advisers to help their clients optimise their financial planning, but can also pose threats. In Aegon’s latest survey, financial advisers were asked what they felt were the biggest opportunities and threats for the advice industry over the next two years.

Their findings reveal many advisers are in a confident mood against a backdrop of change, and it was no surprise to see defined benefit (DB) transfers leading the list of financial advice opportunities again, but the extent to which the adviser community is divided over the impact of leaving the EU does highlight how uncertain a post-Brexit world looks.

Advice opportunities

Topping the opportunities, for the second year running, was advice on transferring from defined benefit (DB) to defined contribution (DC) schemes. 45% of financial advisers voted for this. Coming in at number two was Brexit (27%), closely followed by political uncertainty (22%), and of course these two are not completely separate. Pension dashboards were next on the opportunity countdown (22%), with social care funding coming in fifth place (19%). As last year, the survey finds the adviser community upbeat about the many opportunities.

Advice threats

But financial advisers also recognise headwinds as we move through 2019. While many advisers see Brexit as an opportunity, it was also seen as the top threat to the advice market, voted for by 51% of advisers. Interestingly, pension scams came second (46%). The FCA’s suitability review into DB transfers (34%) came next, closely followed by advice on DB to DC transfers (28%), so another item seen as both opportunity and threat. Clearly, one person’s threat can be another person’s opportunity, and much may depend on the adviser’s client bank.

DB to DC transfers

When financial advisers were surveyed, the two main outstanding points from the FCA concerned triage and contingent charging. The research found widespread support for an effective form of triage (56%), with equal support for some form of ongoing contingent charging (56%).

The FCA has now issued its Policy Statement on these topics. It has not opted to ban contingent charging, although it is undertaking further analysis.


According to Reed & Co, It’s very difficult, but possible, to anticipate the macro-economic implications of Brexit and how investment markets will perform in the run-up to leaving the EU, during the expected transitional period, and after we leave the EU.

There’s clearly a risk that poor economic performance may mean less new money to invest, but those with existing investments will need help, creating a major advice opportunity. One area that still needs to be clarified is how financial advisers use passporting to advise clients already overseas that could be affected.

Social care funding

As our population ages, finding a sustainable way to fund social care is one of society’s greatest challenges. Options include a private or state-run protection policy, a care ISA, or new forms of equity release. The pension freedoms already offer the flexibility to hold back or notionally ring-fence funds within a drawdown pot, so individuals can set aside the capped personal contribution and aim to draw an income from the balance.

Whatever the outcome – and there’s every chance the Government will offer a range of funding options – there should be significant opportunities to help clients here. This will include tax and inheritance planning, as well as optimising the approach to decumulating pensions and other wealth throughout retirement.

Pension dashboards

Pension dashboards should be good for financial advisers as they’ll provide ready access to all of a client’s pensions in one place, making advice more cost-effective and aiding consolidation considerations.

Pension scams

Pension scams did not previously feature in financial advisers’ lists of threats. One possible explanation is that the emphasis across the media on warning against pension scammers may have left some individuals suspicious of anyone seeking to provide help, however legitimate. The enhanced FCA register has a role to play here and must be easily accessible and usable for consumers.

What didn’t score highly

It’s also interesting to look at some of the topics which failed to gain many votes, either as opportunities or as threats. In the advised market, the Lifetime ISA doesn’t seem to be creating any excitement either way, perhaps because it will rarely be used for longer-term retirement saving.

Automatic enrolment didn’t register as either opportunity or threat, but over time as individuals build up substantial DC pots, there are opportunities to grasp around advising on contribution adequacy, moving out of default funds and making pension freedom choices.

Time to find the right solutions to assist your clients to be engaged with their finances?

One thing’s for sure: the sector won’t stand still. The future will bring new opportunities, new rules and new challenges. At Goldmine Media, we can help support your advice process and provide different marketing and communication solutions to assist clients to be engaged with their finances and understand the important choices they need to make.

Our belief is that by recognising the importance of these decisions, clients will be more likely to seek the kind of advice you can provide. For more information about how Goldmine Media can help your business, talk to a member of our Business Development Team on 0845 686 0055, or email:

Source:  Aegon adviser research, September 2018. Research conducted by Research in Finance amongst 100 UK financial advisers. Fieldwork conducted 30 August – 6 September 2018.

Abigail Spencer, Digital Marketing Specialist, Goldmine Media