In focus - Reasons to be cheerful 1,2…

3 min read 25 Mar 22

If you’re a regular reader of our monthly articles, you’ll know that we’ve checked in on the sentiment and progress of the advice profession a number of times throughout the pandemic. And, each time, we’ve always found inspiring examples of advisers’ resilience and innovation in the face of adversity on behalf of their firms and clients.

So now, with the pandemic hopefully loosening its grip on the UK and the last remaining restrictions easing, it feels like a good moment to find out if and how advice firms are turning their thoughts to the future.

Before we continue

The impact of Covid is still reverberating around the globe and the unpredictability and uncertainty of the world we live in has again been brought into sharp focus by the awful scenes unfolding from Russia’s invasion of Ukraine. Against this backdrop, it’s only right to acknowledge that finding reasons to be cheerful can still feel tough for everyone.

But we also know that it’s at times like these when advisers will no doubt be going that extra mile to help guide and reassure clients who are nervous about this latest geopolitical and market uncertainty, just as they’ve done throughout the many difficulties of recent years.

And so, taking a moment or two to focus in on positive news from the advice profession is still very much worthwhile.

The outlook from here

It doesn’t take long to uncover some really interesting positive signs when you lift the lid on some of the latest available data, trends and activity taking place among advisers at a grassroots level.

Let’s start by looking first at broad sentiment levels. Back in late summer 2021, a survey by SimplyBiz of 300 of its adviser members found that the vast majority (76%) were feeling optimistic about the future of their profession. In fact, just 3% of respondents in the same survey expressed negative feelings about how their business would fare beyond the pandemic.

And, even better, this confidence is also translating into positive growth stats for advisers too. According to the 445 respondents from the fourth wave of the lang cat’s State of the Adviser Nation survey carried out into late October 2021, 78% of ‘business influencers’ - those who have a say on decision-making and strategy within an adviser firm - reported an uptick in turnover compared to 2020 (in the previous lang cat survey 30% anticipated an increase in turnover compared to 2019).

Although the lang cat research took place just before the surge in Covid cases due to the Omicron variant, they don’t think that this particular wave of the virus has proven disruptive enough to put a dent in either growth predictions or adviser confidence more recently.

A story of organic growth

The next logical question of course is how this positive outlook is influencing advisers’ plans for the year ahead and beyond? When asked about the main drivers of growth over the next five years, 76% of advisers told the lang cat that they expected this to come from organic growth rather than acquisitions or mergers with other firms. Indeed, only 6% of respondents said they would be happy with their firm being roughly the same size it is now in five years’ time.

SimplyBiz advisers were also happy to demonstrate their commitment to the future of the industry, with only 19% stating plans to exit the sector during the next three years.

Health and happiness of the sector

Growth and corporate strategy are undoubtedly very important but they’re ultimately part of a bigger puzzle that makes up the overall health of the sector. The pandemic has been proof of that, with firms making huge efforts to carefully consider the wellbeing of their teams and the flexibility of their work environment amongst many other things.

And these efforts have had a positive impact on how staff within an advice firm feel about their job overall. Just under 40% of advisers feel comfortable with their level of job security, according to the lang cat, while 31% also said they had no concerns about career progression within their firm. On the less optimistic end of the scale, salary and benefits packages, followed by business management, were cited as the top workplace frustrations by advice firm staff. However, in the interest of staying focused on the positives, we won’t dwell on either of these for now.

The bigger picture

Covid was by no means the only issue to dominate the broader agenda during much of last year. Two of the biggest topics were undoubtedly diversity and inclusion within the wider financial services sector, and climate change following the COP26 summit.

In response to these many competing demands, advice firms are once again demonstrating their capacity to drive change and innovation by rising to the challenge and tackling these issues head on as they look to the future.

Diversity and inclusion amongst advice firms

UK regulators, the FCA, PRA and the Bank of England threw their combined weight behind the issue of diversity and inclusion last summer when they launched their joint discussion paper calling for input from the industry on this very subject.

There are already positive signs of change taking place at a broad level across financial services, with data from recruitment company Core-Asset Consulting showing that nearly half of candidates applying for industry roles late last summer were women.

And there are also some great examples out there of how advice firms are responding directly to the issue of recruiting more women into the industry. One example is  IFA Dawn Patrick who recently announced plans to assist 500 women into mortgage and IFA roles over the next five years.

The road to ESG

The COP26 summit rightly drew a lot of attention late last year but what’s particularly encouraging to see is the lasting action and change in attitude this has helped trigger amongst adviser firms. According to a recent survey from the Association of Investment Companies (AIC) of 210 advisers, just under 80% have bought into the concept of ESG investing and almost 90% expect demand for ESG investments to increase over the next year. The vast majority of adviser respondents also stated an active interest in ESG investing, with 23% considering themselves early adopters while 48% said they had recently become knowledgeable about it.

And advisers’ interest doesn’t just stop at ESG investing. We’ve also spoken to a number of firms during recent months who are going even further to fully embrace ESG principles directly by becoming certified B Corporations – a strict accreditation process which requires firms to make stringent changes to their own business practices in order to become more sustainable. In case you missed them, you can catch up with recent interviews and blogs where we talked directly to these advice firms about their efforts around ESG and becoming a B-Corp, as well as diversity and inclusion.

Moves in the right direction

So, we’ll leave you with the thought that ‘at times like these advisers really are going that extra mile to help guide and reassure clients’ as well as stepping up to the plate on wider issues like diversity and inclusion and ESG considerations not just for their clients but their own businesses

More from the In Focus series

In Focus: Diversity and inclusion – How one advice firm is tackling diversity and inclusion

In Focus: Diversity and inclusion – what next for regulation?

In focus: Advisers on sustainability