This is a busy time to be an advisor. Not only is the market in the middle of a period of unexpectedly high volatility, advisors also have to worry about how to manage and grow their practices. Our CEO David Inglesfield examines how stricter regulation, geopolitical uncertainties, technological advancements, demographic changes and public perception are impacting the IFA industry. Since IWP helps advisors continue to provide independent advice while giving the infrastructure they need to grow, David frequently thinks about topics that matter to advisors nationwide.
What trends are dominating the financial advice market today?
We have seen a lot of consolidation, yet some consolidators haven’t achieved the intended success. In some cases, this can be due to practices such as setting targets for selling specific investment products, or seeking to increase pricing. This sits uncomfortably with many advisors, as it may not always be in the best interest of clients and can often contradict the historical advice given to clients.
We have also seen a lot of regulatory changes, such as the Senior Managers and Certification Regime (SM&CR), MiFID II, GDPR and the review of Defined Benefit Transfer Advice. So many significant changes in regulation has made life challenging for many advisers, as they often don’t have dedicated compliance professionals.
Both of these are reasons why advisers have expressed so much interest in IWP’s differentiated proposition – we act as an investor, not a consolidator. We provide infrastructure and compliance support, but let the businesses run largely as they always have done as directly authorised entities, so advisers get the best of both worlds for their businesses and clients.
How has the situation evolved with recent market turbulence due to the rise of COVID-19?
While the circumstances around COVID-19 and, its impact on the markets, are unprecedented, I don’t believe the current environment will meaningfully alter trends around IFAs looking for investment opportunities. If anything, it amplifies the need for investment in technology that allows for digital client communication. Clients will want to be able to check their portfolio and assets remotely at any time. We expect to continue to see local IFAs looking to join larger groups who can provide them with better operational capabilities.
We’re still committed to building a national IFA brand and that includes strategic acquisitions. Our current pipeline remains strong, although some terms may need to be slightly adjusted to meet current market realities. We see the overall direction of the market staying the same.
What do you want to see post Brexit?
I think all advisers would say regulatory stability due to the sheer volume of change in recent years. Change means more work for advisers, which takes away from the valuable time they have to spend with their clients. In addition of course, the tax system is inherently complicated and changes frequently, which can make it hard for advisers to plan long-term for their clients.
Do you think trust in IFAs has declined?
Well publicised problems with large national investment firms don’t give consumers a good impression of the industry, especially when clients are seen to lose money due to the failings of the industry or the regulator.
I think that people inherently place more trust in local independent advisers than they do in national brands. At IWP, we see our firms very much as providing advice which clients can trust.
The role of an IFA is to ensure that through their advice, clients can realise their long-term goals. That’s why it’s our mission to provide local firms with the support they need to enable them to grow and thrive and ultimately keep delivering the best quality of service for their clients.
What really matters to clients?
A lot of companies in the wealth management industry tend to focus on investment performance, whether they are active managers aiming to outperform the market or passives giving lower costs. Investment results are obviously important but they’re far from the only thing that matters to clients. Too much focus on the investment side can alienate some people and might even be one reason why so many people don’t take advice at all.
IWP’s Independent financial advisers provide holistic financial planning, including of course investment advice but remembering that investments are a means to an end. Most clients are focussed on achieving personal goals, such as ensuring a comfortable retirement. Other considerations, such as planning for personal circumstances and tax, can also have a considerable impact on helping clients achieve the outcomes that are important to them.
David Inglesfield DipPFS TEP, CEO