This article first appeared in Professional Adviser.

Creating a more manageable environment for advisers.

2023 is shaping up to be a big year for financial advisers.

With the onset of Consumer Duty, tax changes and rising interest rates leaving many clients feeling nervous about their personal finances and wealth, the onus falls on IFA firms to adapt and ensure they can continue delivering optimal outcomes over the long term.

For some, this will call for a careful balancing act as the business adjusts its way of working to meet changing regulatory and client needs while ensuring minimal impact on service standards and profitability.

Set out below are four ideas that may help create a more manageable environment and support advisers to maximise the opportunities that inevitably arise during periods of change.

1. Changing the narrative surrounding Consumer Duty

Consumer Duty has the potential to drive positive change from the top to the bottom of the industry, but only if it’s embraced in the right way.

It’s the responsibility of the Financial Conduct Authority (FCA) to help businesses understand their vision for Consumer Duty and how they can use it in practice as a force for good, but it falls on advisers to – as much as possible – approach the new rules with positivity rather than fear. Moving away from certain EU legislation presents an opportunity for us to be more tailored and specific in how we’re serving clients in the UK.

No one can deny that we’re talking about a momentous piece of legislation which calls for a great deal of commitment from the industry, but I genuinely believe that if advisers take a positive approach and focus on the opportunities, they’ll get good outcomes.

2. A more open dialogue between the regulator and industry

More broadly, and as new investment opportunities continue to gain traction among retail investors, greater dialogue and transparency on all sides will be crucial.

The advice sector already struggles with the over-provision of information, an issue which is in danger of becoming more onerous with the latest changes, but Consumer Duty should be about more clarity, not less.

For the younger generations in particular, there is clear disparity between how easily they can invest in high-risk strategies such as crypto – which come with endorsements from so-called ‘finfluencers’ and a conventional investment such as an ISA. That needs to be addressed to create a better-than-level playing field.

The red tape burden surrounding traditional investment vehicles will only increase the chances of savers being driven towards questionable strategies that could put their wealth at risk. Advisers and the regulator need to work together to resolve these issues.

3. More open and transparent tech

The question of how we make the advice industry more accessible has arguably never been more urgent than right now. But it’s something that can only be solved when the tech we’re using to service clients is more open.

Having a good range of tech providers who are prepared to put their products in the open market really plays into this. The fundamental issue is that if an adviser comes across a product they think could better enrich the client experience, particularly at a time when clients desperately need a clear picture of their finances, implementation can be a major upheaval if integration is an issue.

Having more providers prepared to eliminate these barriers so that systems can talk to each other will make things much better for clients and advisers alike.

4. A heightened focus on data quality

IFAs can often be so focused on getting a new client on their books quickly and with minimal fuss, that only ‘need-to-know’ information is obtained during the initial fact find.

However, the first encounters are not only key in terms of building trust with new clients but also collecting data that will help provide them with the most meaningful service over the long term.

We all know client segmentation is a big theme of consumer duty. Having solid data will allow IFAs to demographically categorise clients, rather than simply focusing on how much wealth they have, in turn helping them build a far more valuable service.

Going back to my previous point, if a firm is consistent with getting the right data inputs from day one, then it also becomes much easier to integrate the different systems you are using. If an adviser has decided an app is needed to enhance their service, it needs to have access to their full breadth of client data in order for it to provide them with useful and accurate information.

As client needs continue to evolve, and as the regulatory landscape changes to accommodate them, advisers need the headspace, support and tools to adapt, so they can keep servicing their clients with confidence.