Advisers fear robo regulatory threat – Friday IFA news round-up, the week’s news in a nutshell…

by | Nov 3, 2017

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Here’s your Friday IFA news round-up, what you need to know from the industry and the investment communities that’s happened this week. Read this when you have a few minutes to spare and you’ll be up to speed on almost everything.

Advisers fear robo regulatory threat

Advisers are concerned that the expansion of robo-advice could mean potential future regulatory issues for their businesses, while also failing to deliver the best outcomes for clients

 

This is the key finding from research from Prudential.

Its nationwide survey of advisers found that 76% are worried about possible long-term compliance and regulatory challenges, whilst 67% fear robo-advice solutions will not provide the best advice for clients.

But, it’s not all bad news, the research also discovered that adviser attitudes to robo-advice have changed in the past year, and 69% now believe technological-based solutions can help to close the advice gap. A similar study last year showed that just 17% believed robo-advice would help.

 

And when it comes to launching their own versions of robo-advice over the coming year – 41 per cent of advisers said they or their firm had plans to offer robo-advice solutions alongside traditional services.

Nearly half said offering robo-advice will help their business grow by enabling them to help clients with smaller funds compared, with just 27% who disagree.

Yet there is a concern that robo-advice solutions are a threat to adviser businesses. Some 40% of advisers are worried about their firms losing out to technological-based solutions and more than half saying robo is suitable only for clients with smaller funds.

 

Head of Prudential’s business consultancy for advisers Paul Harrison said: “There’s a growing acceptance that robo-advice has a role to play but advisers have real concerns about the potential regulatory impact it will have.

“Many advisers remain sceptical about the risks and rewards of robo-advice, although improved technology can bring greater efficiency, reduce costs and help advisers to serve clients better while continuing to run viable businesses.

“However, views are changing rapidly as technology expands. Advisers will need to adapt to prove the ongoing value of bespoke advice and benefit from the opportunities technology offers.”

 

The table below shows how divided advisers are over the future uses and risks of robo-advice.

What do advisers say? AGREE DISAGREE
We will launch robo-advice solutions 41% 44%
Robo is only suitable for clients with small funds 54% 20%
Robo can help us grow our business 46% 27%
Robo might not produce the best outcomes for clients 67% 7%
Robo could mean regulatory or compliance issues in the future 76% 4%

Succession acquires two firms

Succession Group has acquired Edinburgh and Glasgow-based Accountants Financial Services (Scotland) and Manchester and Stratford-on-Avon-based H&L Financial (the holding company for Inspire Wealth Management). Succession bought the companies using its new fast-track acquisition process.  Read more.

 

The interest rate hike and what the Bank of England will do next

James Carrick, Global Economist at Legal & General Investment Management asked:

What happened today?

 

“The Bank of England increased interest rates by 0.25% today to 0.5%. The last time the UK saw a rate hike was in July 2007; Gordon Brown was Prime Minister, the ban on smoking in public places had been introduced a few days earlier, and the first iPhone had recently been launched. The world has changed a lot in the last decade.

“Seven members of the Monetary Policy Committee (MPC) supported a hike while two dissented.

“The decision to raise rates was well anticipated by the market. The initial reaction was for both gilt yields and the pound to fall, as the Bank’s Governor adopted a ‘dovish tone’. In particular, the MPC’s minutes removed the statement about expecting interest rates to increase faster than the market is pricing in.”

Why is the Bank of England hiking interest rates even though economic growth is lacklustre?

“The Bank of England stressed in the press conference that although growth is weak by historical standards, it is not necessarily below trend. Weak productivity and poor demographics are depressing trend growth, keeping unemployment low. This is consistent with our own research that highlights the drag on growth from baby boomers retiring (see here and here). With Brexit uncertainties also slowing immigration, UK firms report elevated recruitment difficulties, despite weak economic growth.”

How many more hikes will we see?

“The Bank of England was also keen to stress that inflation would not return to target unless interest rates were hiked further. They broadly agree with market expectations of another couple of hikes in the next three years. This is consistent with our own expectation of slow rate hikes. Expect the mantra of “limited” and “gradual” to be reiterated in the following days/weeks/months.”

What happens next?

“The Bank of England is in a difficult position. As a result of a weaker pound and lower trend growth, if it doesn’t raise interest rates, inflation could remain sticky above target. But if it raises interest rates too much, it risks hurting the economy. This suggests the Bank of England will act cautiously.”

Car sales to plummet

In response to the SMMT prediction that car sales will continue to plummet in 2018, Freddy Macnamara, CEO and founder of Cuvva, said: “Car sales have been falling for six consecutive months and if the latest prediction is right, they will continue to fall for at least another year. This is obviously a huge worry for manufacturers and I don’t think we can put the trend solely down to the impact of Brexit on consumer confidence. We’re seeing a paradigm shift in the attitude towards car ownership, especially among city dwellers. This is partly down to the rising cost of running a car, but is also a result of technology, with apps such as Uber giving people cheaper options.

“Driving habits are also changing, and it’s becoming more and more popular for infrequent drivers to car share, or borrow cars from friends and family for short periods, rather than have their own vehicle. The car insurance market has reacted to this by offering far more flexibility to drivers . It’s now easier than ever to borrow someone’s car for a short period of time and quickly get insurance on a pay-as-you-go basis.”

Mirabaud appoints Daniel Moreno Senior Portfolio Manager, Emerging Markets Debt

Mirabaud Asset Management has appointed Daniel Moreno Senior Portfolio Manager in charge of Emerging Markets Debt. Mirabaud’s Fixed Income team currently manages close to one and a half billion dollars, allocated across a range of products and mandates, for both professional and institutional investors. With the arrival of  Moreno, Mirabaud has launched its dedicated Emerging Market Debt fund in Luxembourg which aims to capture some of the best investment opportunities across the universe, as well as maintaining superior risk-adjusted return over the long run. The fund will take an unconstrained, global macro top-down approach, offering flexibility and diversification. Such an investment solution has been structured as an answer to our clients’ and prospects’ needs in terms of non-benchmarked actively managed fixed income in the sector.

RYSE launches its investment management services platform

RYSE Asset Management, the investment and advisory boutique, announces the launch of its investment management services platform. The RYSE platform is tailored for high net worth individuals, family offices and institutions. It seeks to facilitate investments into early stage companies pursuing innovative disruptive technologies across a number of sectors. RYSE intends to build a diversified portfolio of companies that include digital health, cyber security, internet, food technology, educational technology, financial technology and property technology.

Vanguard expands range

Vanguard has expanded its range of low-cost fixed income products with the launch of two UCITS, corporate bond funds. The Vanguard Global Corporate Bond Index Fund offers simple, low-cost access to investment grade debt issued by companies in both developed and developing markets worldwide. The Vanguard Global Short-Term Corporate Bond Index Fund is a passive option for investors seeking exposure to 1-5 year duration corporate bonds. Both funds track Bloomberg Barclays’ indices.

PLSA on the PPF Third Triennium Consultation 

The Pensions and Lifetime Savings Association have submitted a response on the PPF Third Triennium

Joe Dabrowski, Head of Governance & Investment, Pensions and Lifetime Savings Association, said:

“We are pleased that the PPF has continued to engage closely with the PLSA and industry in developing the Levy rules and we have responded to this important consultation.

“It is good news for pension funds and their members that DB schemes will see a 10% reduction in the levy and SME’s a 30% reduction in bills.  Indeed, two thirds of schemes will see a lower levy which is to be welcomed as trustees and pension managers continue to work to improve the sustainability of their schemes.

“We welcome many of the changes suggested in the consultation as this will improve the predictiveness of the levy.  Specifically, we support the proposed changes to the “large and complex” and “independent full” scorecards.  We also note the intention to use credit ratings based on the improved predictiveness for relevant employers, and support the proposal to ‘smooth’ ratings during the year, rather than assess on a one-off basis.

“While there is much to be positive about, we do need to be mindful that there will be many adjustments and changes that need to happen as a result of these proposals and not all schemes will see their payments fall.  We would encourage the PPF to look for ways to mitigate the impact on schemes that will see potentially large year on year increases.

“Looking to the future, we would also encourage close observation of the impact of these proposals once implemented, to ensure that they do not drive unexpected behaviours or costs for schemes and sponsors.”

PIMFA Annual Summit 2017

Wednesday 8th November 2017, 09:00 – 20:00

Join the Personal Investment Management & Financial Advice Association (PIMFA) to hear from some of the leading figures across the world of business, finance and politics.

PIMFA 2017 Summit will provide a unique opportunity to investigate and gain a comprehensive understanding of the issues that impact the wealth management sector and provide an exceptional opportunity for the wealth community to debate the future of the industry and its role in spurring economic growth. Industry speakers include from the Financial Conduct Authority (FCA), The Pensions Advisory Service and the Head of Financial Institutions Advisory & Financial Regulatory Group

It takes place at The Grange Hotel Tower Bridge, 45 Prescot Street, London E1 8GP. Wednesday 8th November 2017 at 9:00am – 20:00pm. Please click here to see an agenda for the summit.

PK Group’s new parthership

The automated investment platform Fundment and the financial planning arm of PK Group has announced a new partnership. Fundment says it has the joined-up, low-cost power of an automated investing solution – but places it in the hands of IFAs. Its automated platform, it says, makes it easier to assess clients’ investment objectives, capacity for loss and risk profile, as well as invest and manage their assets through an inbuilt discretionary fund manager (DFM).

Tilney appoints financial planner

Financial planning group Tilney has appointed Andrew Kirk as a financial planner. Kirk, who joins the company’s Exeter team, is the latest hire in the group’s dedicated recruitment drive and will focus on the Cornwall region.

He joins from HSBC here he was worked for five years as a premier relationship manager. Prior to this he worked at Halifax where he held a number of roles over a decade, most recently a senior financial adviser. In Tilney’s Exeter team, Kirk will deliver advice as part of the firm’s ‘two expert’ approach which sees financial planners paired alongside the firm’s investment managers to provide a high quality integrated wealth management service to clients.

Sanlam appoints Justine Colley as Portfolio Manager 

Sanlam UK has  appointed Justine Colley as Portfolio Manager to its London office, where she will report directly into Charlie Parker, Head of Portfolio Management. She joins from European Wealth, where she spent the last year managing the South African desk as well as managing solutions for discretionary and advisory managed clients. Prior to this, she was a Wealth Manager at Tilney and Institutional Sales Manager at Mansard Capital.

VitalityHealth launches new Adviser Hub platform

VitalityHealth has launched its new Adviser Hub platform, offering 24/7 access and a range of developments aimed at further enhancing the experience for advisers. The platform, which will be rolled out to advisers throughout the autumn, will house a selection of downloadable forms and literature items, including renewal documentation. The hub will also offer improved service delivery through immediately logging and confirming receipt of requests from advisers.

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