The financial advice industry grew last year despite rising costs and widening regulation, research published today showed.
The sector’s growth has been driven by ever more complex financial needs, low growth in DIY investing and a lack of alternatives to spending time with a professional adviser, the survey from fund data provider FE fundinfo found.
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Nearly eight in 10 independent financial advisers (IFAs) reported an increase in new client numbers last year, with only 1.4 per cent reporting a reduction.
More than half of advisers said turnover increased at least five per cent with almost 30 per cent reporting turnover increased more than 10 per cent.
Despite the rise in demand for financial advice, IFAs have been hit with rising costs and a greater regulatory burden.
Almost 85 per cent of advisers surveyed reported that their operational costs had increased over the last 12 months and over half cited cost and regulatory burden as the main concerns for their businesses.
Among the costs affecting advisers, 33 per cent said staffing was their biggest concern, followed by professional indemnity insurance (27 per cent), reporting and regulatory concerns (26 per cent) and rising technology costs (15 per cent).
Environmental, social and governance (ESG) investing is increasingly taking hold, with more than half of advisers already incorporating ESG factors into their investment propositions, with a further 37 per cent saying they plan to do so shortly.
Retirement planning is also another potential growth area identified in the research, with nearly half (48 per cent) of advisers offering a dedicated retirement proposition compared to 34 per cent last year.
Rob Gleeson, head of investments at FE Investments said: “Prior to the introduction of pensions freedoms, planning for retirement was fairly simple.
“Investors would invest to accumulate and then pay into an annuity.
“But now, even for those investing in vehicles like self-invested pension plans (Sipps), there is no guarantee of long-term income.
“We need to reframe attitudes to risk in retirement in order to provide a long-term sustainability of income.”