Almost two-thirds of advice firms have seen their plans for the future affected as a result of COVID-19, according to new research from FundsNetwork – with one in ten facing significant challenges to their business’ aspirations.
FundsNetwork’s ‘IFA DNA’ research captures the impact of COVID-19 on the UK’s financial advisers. The findings reveal the repercussions of the pandemic for the advice industry so far, with more than half worried about their firm’s profitability.
The disruption and uncertainty caused by the outbreak of coronavirus has already forced many firms to reassess their plans for the next few years. 55% are worried about the impact of an economic downturn upon their clients; more than a quarter expect to see a fall in the value of client assets, and 14% are concerned about a slowdown in demand for advice services. 20% have cautiously placed plans on hold – including intentions to sell their firm, hire new staff, or invest in staff development.
Impact of the coronavirus crisis upon firms’ plans for the next 3-5 years
|Impact||% of advisers concerned|
|Lower value in assets/ reducing recurring income||27%|
|Future plans put on hold||20%|
|Slow in client demand/ reduction in new business||14%|
|Difficulty with face-to-face meetings||13%|
|Investor confidence has reduced||11%|
|Adoption of new technology and processes||8%|
|Change in working practice||6%|
Despite the challenging outlook, a number of firms have strengthened their resolve to grow since the start of the year. 64% of advisers plan to grow organically, having identified opportunities to increase client assets within the next 3-5 years – up from 48% at the start of the year. While many recruitment plans may have been temporarily postponed, almost a third (31%) expect to grow by hiring staff in the next 3-5 years (compared with 13% at the start of the year).
Jackie Boylan, Head of FundsNetwork, Fidelity International, commented: “Our research highlights some of the very real challenges facing the advice sector in the short-term, following the spread of the pandemic. Social distancing rules have meant that advice firms have had to completely change how they operate – implementing new working practices, and in many cases, teams have had to grapple with new forms of communication and technology. On top of this, recurring revenues are under pressure given uncertain markets, while new clients may be holding off seeking financial advice until life becomes more like it once was. Against this backdrop it’s little wonder that firms are pausing to consider what comes next.
“However, the findings reinforce how resilient and adaptable today’s financial advisers are, considering new and different ways of supporting clients through continued uncertainty. Despite the challenges many face, the majority are more determined to grow their businesses than they were before the crisis.”