New research from the FSC shows the advice sector has remained resilient through the Covid-19 pandemic, but pressure to meet new regulations has impacted some advisers.
FSC CEO Richard Klipin says it conducted research last year that asked Kiwis for their views of the sector. Its findings have just been released in a report called Unlocking the Potential of Professional Financial Advice.
“The aim of this new piece of research is to understand how professional advisers view the sector from the inside, its current challenges and their outlook for the future,” says Klipin.
“Financial advisers are the front line of the financial services industry so it’s vital that we understand the health of the sector and where more focus is needed.”
The report looks at how the sector has coped with the disruptions over the past year.
“Advisers had to change how they did business, and the result has been transformative,” says Klipin.
“The pandemic accelerated adoption of digital communication and online client meetings to make advice more accessible. These changes have now become permanent with 65% of those surveyed conducting more client meetings online, and 50% more over the phone.
“This ability to continue to provide advice was hugely valuable, with 70% saying their clients had become more resilient to financial stress through receiving advice during the turbulence of Covid-19.”
…advisers are the front line of the financial services industry so it’s vital that we understand the health of the sector…
However, the report notes that Covid-19 delivered a hit to the business landscape for financial advisers, with more than 40% saying conditions had worsened in 2020. In addition, meeting the new regulatory environment has also impacted on the advice community.
“Preparation for these changes is ongoing, and just under 90% of respondents reported being either ready or continuing to implement changes to comply,” says Klipin. “While this is just a snapshot of the community, we acknowledge the hard work that occurred across the country to meet these requirements within the timeframe.
“However, there is no denying how testing this has been; with over 70% saying they find the current regulatory environment to be either reasonably challenging, or the most challenging environment they have ever worked in. More than 63% have experienced increased stress levels during this process.”
…there is no denying how testing this has been; with over 70% saying they find the current regulatory environment to be either reasonably challenging…
Klipin says it is crucial the community support each other post 15 March “…to ensure sustainable, positive outcomes and improved wellbeing for advisers and customers alike”.
While Klipin says more than half of professional advisers expect their practice to grow in the next 12 months, and three in four expect growth in the next few years, half of all current advisers are planning to retire in the next three years.
“Recruitment therefore must be a major focus for the sector,” he says.
- Unlocking the Potential of Financial Advice – Resilience, Transformation, and Opportunity can be downloaded here.