2024 marked a significant milestone for the Schroder Adviser Survey: 15 years!
Looking back to 2009, advisers were preoccupied with RDR (announced in 2006, but not implemented until 2012), speculating about the winners in the platform space as Cofunds and Skandia/Selestia battled for the top spot, and debating whether advisers could put all their new business on a single platform.
Meanwhile, the ongoing effects of the credit crunch dominated headlines and Barack Obama was sworn in as President of the USA.
Fast forward to 2024 and advisers are still focused on regulation and technology, while another very different president about to take office. But although the overarching themes may sound familiar, there are some interesting points of detail this year.
1. Regulation continues to be advisers’ primary concern
Notably, the proportion of advisers identifying regulation as their biggest challenge has surged from 32% in 2022 to 57% this year.
This is probably no surprise given the activity of the regulator this year, with a focus on annual client reviews, various Dear CEO letters, retirement income and the ongoing implementation of the Consumer Duty.
Assessing value using customer feedback is the top Consumer Duty-related priority for advisers heading into 2025, followed closely by improving consumer understanding.
The proportion of advisers identifying regulation as their biggest challenge has surged to 57% this year
Interestingly, the management of vulnerable clients has more than doubled as a priority, rising from 9% last year to 21%. Given that 72% of advisers report that 10% or fewer of their clients are categorised as vulnerable, this area is set to gain more focus.
65% of advisers indicated that the fair-value outcome is putting pressure on ongoing charging models. With the regulator continuing to scrutinise the prevalence of ongoing charging structures — currently used for around 90% of clients — there is growing interest in alternative charging models.
It will be fascinating to observe the introduction of different approaches to charging and the success of emerging new models such as subscription-based fees or hybrid approaches, combining lower ongoing charges with fixed fees for specific advice needs.
2. Cash conversations with clients looking to benefit from interest rates continue
However, 67% of advisers report that clients who were previously reluctant to invest are now either investing or considering doing so — up significantly from 49% in May 2024.
This shift aligns with the 55% of advisers who plan to reduce allocations to cash. The primary beneficiaries of this trend are equities, both UK and international, followed by emerging markets.
3. Wealth transfer is on the radar
62% of advisers reported a concern about losing assets as money transfers across the generations.
However, the data tells a complex and potentially different story: client demographics skew towards older clients, the proportion of advisers willing to advise clients with less than £50,000 remains static at 25%, and the percentage of advisers setting minimum investments above £200,000 has steadily risen — from 10% in 2020 to 24% in 2024.
Many advisers admit they lack a strategy for engaging next-generation clients
Many advisers admit they lack a strategy for engaging next-generation clients, either within existing family groups or as new clients. This oversight could pose challenges for those pursuing an acquisition strategy, as potential buyers will likely scrutinise client demographics and the likelihood of retaining assets post-transfer when valuing a book of business.
4. AI and technology such as ChatGPT is still firmly on the agenda
21% of advisers reported that they had implemented AI and technology in some way in their business. AI has the potential to help streamline the advice process from factfinding through to production of the suitability report.
However, the challenge is whether the technology can re-engineer the process delivering end-to-end improvements to reduce risk, time and cost while enabling advisers to spend more time with clients — or whether it will only improve isolated steps within the process.
The number of advisers who have said that they will never use AI has reduced quickly from 27% in May 2023 to only 10% this year. Clearly, it’s here to stay.
Finally, a throwback to 2009: back then, based on comments from the then FSA, the industry debated whether advisers could place all their business on a single platform, with 90% saying they should. Fast forward to 2024, and only 18% of advisers use a single platform for new business.
Some things do change over time!
Gillian Hepburn is commercial director at Benchmark
Comments