What will be the biggest challenges for advisers in 2016?
Now almost four years since the introduction of the RDR, we look ahead to shed light on what are likely to be the key challenges for advisers in 2016:
1) Auto enrolment of small firms
The involvement of so-called ‘micro firms’ in the auto enrolment initiative next year will present a significant challenge for advisers both in terms of capacity and ongoing service. Although small firms are easier to auto enrol than their larger equivalents the sheer number will test capacity in a low margin sector while employers and staff will be less than willing to pay for ongoing advice.
2) Financial advice markets review (FAMR)
The FAMR has been introduced to explore whether or not there is an advice gap for those who feel they cannot access financial advice or do not value it. Alternatives such as Guidance, Robo-advice and D2C solutions will present significant competitive challenges particularly when targeting younger clients, while continuing regulatory complexity adds to business costs.
3) Market volatility
Markets have remained unstable for the majority of 2015. A combination of factors including China, emerging markets and interest rate rises as we enter the New Year leave very few safe haven options for investors; especially those with a low attitude to risk. Market volatility can be expected to continue during 2016.
4) Common misconceptions
There is still a reluctance among accountants that collaborating with advisers may have a detrimental impact on their business. However, the often the best way to achieve growth is to expand the service offering, taking a more proactive approach using DPB licensing which costs just £251. The challenge for advisers is to show how such collaboration can improve the client solution to the benefit of all parties.
5) Buy to let exodus
The Chancellor’s decision to increase stamp duty on Buy to Let and second homes by 3% will lead many landlords to reconsider the allocation of their investments. This offers an opportunity for accountants and advisers to work together to create and effect a tax efficient financial plan to achieve the best possible client outcome.