Reasons to be cheerful in 2019

19th December 2018

2018 was another year when our profession demonstrated its resilience and ability to cope with waves of change and seismic challenges.

It started with MiFID II and was followed closely by GDPR. Both now seem a distant memory. But the impact will reverberate through the way we work, and give advice, for years to come. And, that’s before the full effects of PROD are felt.

GDPR and MiFID II aside, other challenges emerged. Pension transfers and their impact on the Professional Indemnity Insurance market being particularly worrying, coupled with increased market volatility.

But with 2019 fast approaching, what might be on the horizon for our clients and our profession? I see several concerns and threats which may well trigger a wakeful moment at ‘3.00 am’:

Brexit: At the time of writing, the Brexit fog hasn’t lifted. The uncertainty is damaging. Brexit could turn out to be equivalent of the Millennium Bug and dissipate quickly or, pose a lingering threat to investors and businesses alike. It’s impossible to know. What we do know is that firms need to remain vigilant and nimble, ready to react to the final outcome.

Market volatility: Increased market volatility will continue into the new year. It’s during these periods that the work you do for your clients comes into its own. Coaching them and managing behaviours help clients understand investment fundamentals, remaining invested in the knowledge that short-term volatility is the price they pay for long-term investment returns. The threat, of course, comes from the financial media, which trumpets loudly about large (and temporary) falls in stock markets.

The tightening PI market: A heightened regulatory focus on pension transfers, coupled with a proposed increase to compensation limits, mean that PI insurers are becoming increasingly nervous. This translates into a tightening of the market with firms seeing premiums rise, restrictions imposed, and excesses increased. It’s a worry and poses an existential threat to some advisory firms, which in turn, could further widen the advice gap.

Despite these threats, we can be positive about the future. Not least because of the increased levels of professionalism and the undoubted need for advice. It’s somewhat frustrating that we’ve collectively failed to crack the trust issue; possibly the most enduring of all the threats our profession faces.

You know the value you add to your clients. You see how financial planning changes lives. Indeed, the FCA’s Financial Lives survey shows that while only 6% of adults in the UK have taken regulated financial advice in the past 12 months, 25% need it. That’s over 12 million people who aren’t getting the advice they need.

Why? In part, due to a lack of trust. 

The same survey shows 42% of adults lack confidence in the UK financial services industry. While our own YouGov survey from earlier this the year showed that a lack of trust was a key reason those over 55 don’t seek or take up financial advice. In 2019, the issue of trust is a threat but also an opportunity.

Tackling trust issues means going back to basics. We must communicate the benefits of financial planning to those people who need it. As well as demonstrate the good we do and how advice helps those who receive it achieve their aspirations. Indeed, at a time when pension transfers and freedoms offer greater threats and opportunities to consumers than ever before, never has there been a greater need for the services you offer. Communicating is one thing. Doing it in a way to ensure people listen is another. A thought for another day.

Some of our highlights from the past 12 month, include:

Beaufort Financial:

• Welcomed seven new partner firms into the group across the UK
• Raised over £20,000 by completing the Three Peaks Challenge
• Supported the next generation of planners with St Helens office recruitment of apprentices
• Listed in the New Model Adviser and FT Adviser top 100 firms
• Shortlisted in the best Network category at the 2019 Professional Adviser awards

Beaufort Investment:

• Built funds under management approaching £1 billion
• Continued to support The New Model Business Academy
• Emma Clarke shortlisted for ‘Fund Analyst of the Year’ in the Women in Investment 2019
• Shortlisted in the best Model Portfolio Service category in the 2019 Professional Adviser Awards

All that remains is for me to wish you a Merry Christmas and ask you to commit to doing everything possible to improve trust in our profession as we head into 2019.