Six months in, five things shaping financial advice in 2022 (so far)

1 min read 14 Jul 22

Inflation, Russia, Boris, energy – the first half of 2022 has been jam-packed. Here, lang cat consulting director Mike Barrett picks five of the biggest things affecting the financial advice landscape…

Political puzzlement as Guy Opperman leaves, then stays

It has been an unpredictable (I’m being polite) time in British politics in the first half of 2022, culminating at the time of writing in a swathe of resignations by MPs, then by the Prime Minister, and then with a leadership contest that’s set to take us deep into Q3. And one of the oddest, though ultimately reassuring, moments was the resignation then near-immediate reappointment of pensions minister Guy Opperman. The following is literally what it says on the government’s website: ‘[Guy] was appointed Parliamentary Under Secretary of State at the Department for Work and Pensions on 8 July 2022. He was previously Parliamentary Under Secretary of State at the Department for Work and Pensions from 14 June 2017 to 7 July 2022.’

Opperman’s re-appointment is, I think, a good thing for the advisory sector, which like any other benefits from continuity and from clarity, not least on small pots, the mid-life MOT, and admirable efforts to boost common engagement with pensions.

Platforms and the wonderful world of private equity

There is little mystery to PE interest in the UK platform sector – and the words ‘apathy’ and ‘sticky’ go some way to explaining that. ‘Apathy’ to describe a sweeping hesitancy by advisers to switch platform providers, and ‘sticky’ to describe assets on those platforms as a result. By the latest count (thanks New Model Adviser), since 2020 four PE houses have moved into the sector, acquiring or taking stakes in six platforms. The consideration for advisers here is whether the shorter-term and somewhat cyclical nature of PE matches well with the longer-term nature of savings and investments – something M&G Wealth Platform CEO Richard Denning talks a bit about here. “Advisers want security of ownership and for the service to be frictionless,” Denning said. “If a business changes hands, and the new owners come in with a different strategy and change things, it disrupts the adviser and disrupts the customer.”

Fear and loathing in ESG

UK investors are increasingly turning to advisers for guidance on ESG investing but understanding the sector hasn’t got much easier in the first half of 2022. Russia’s invasion of Ukraine, a deepening energy crisis, record temperatures, even the furore surrounding Stuart Kirk’s suspension by – and later his resignation from – HSBC for remarks about climate change, may be making it more difficult for advisers to satisfactorily answer clients’ questions.

Thankfully, providers are beginning to take this challenge seriously. There are a growing number of ‘green’ options which permit scrutiny of their ESG credentials while addressing concerns around returns.

The expansion of Model Portfolio Services

If anything, the growth of model portfolio services accelerated in the first half of 2022, and this I think suggests two things: that advisers appreciate the simplicity of a small-ish range of models matched to risk attitudes and goals, but still benefit from choice and competition. Simple can sometimes be too simple.

Of course, ‘the more the merrier’ presents challenges to advisers too: how to compare the market and, when necessary, conduct a full and proper due diligence on a panel of providers. 

The ongoing significance of intergenerational wealth

The cost-of-living crisis – an issue set to extend far beyond the first half of this year – has brought several aspects of financial planning into sharper focus, among them the importance of intergenerational planning and wealth transfer.

An important part of this is, of course, extending the relationship between an adviser and client to the client’s wider family. This sounds straightforward but we know it isn’t because, if it were, every adviser with a growth objective would be doing it, and every client worried about inheritance would be encouraging it.

Yet, good news. Research published in June suggests a third of UK families now share the same financial adviser. Of those respondents in the survey who have an adviser, more than half (57%) said they share them with their parents, two in three share them with their grandparent(s), and a third share them with their in-laws/partner’s parent(s).

Mike Barrett is Consulting Director at the lang cat