IN FOCUS6-8 min read

Reassurance and revelations: the 2023 Schroders Adviser Survey

The annual Schroders Adviser Survey seeks the views of advisers on a broad range of topics. The latest survey highlights some of biggest threats and opportunities for advisers in 2024.

09/01/2024
Schroder Adviser Survey 2022

Authors

Gillian Hepburn
Commercial Director

The annual Schroders Adviser Survey seeks the views of advisers on a broad range of topics. Over 250 advisers from more than 200 firms across the UK completed a survey between 20 October and 6 November 2023. The responses provide a degree of reassurance that the views of advisers and their clients are much as you might expect in many areas. But as always, there are also areas that reveal more unexpected and thought-provoking views.

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Reassurance

1. Cash discussions

95% of advisers are having conversations about long-term investing vs cash deposits. The question of ‘should I invest in cash?’ is not straightforward and this is an area where advisers can provide real value to clients. Advisers can help to ensure that their clients’ money is deployed in the right place to meet their long-term goals and that clients do not miss out on potential opportunities as markets rebound. Schroders has crunched the numbers, reviewing historic returns on cash and stock market investments over a range of timeframes extracted from 96 years’ data. This shows that the likelihood of cash savings beating inflation has been about 60:40 for the majority of all timeframes. In contrast, for every 20-year timeframe in the past 96 years, equities have delivered inflation-beating returns.[1]

2. Preserving capital

Advised clients continue to identify capital preservation as their key financial priority and have less of a focus on inflation and interest rates. Many advised clients are in or near retirement, the stage in life when preserving a pension pot and other assets to fund later life is of particular importance. As many are likely to be mortgage free it makes sense that interest rates are seen as less of a concern.

3. Cost of living crisis

 89% of advisers report that they have adjusted some of their client plans due to the cost of living crisis. The key reason is rising household expenses. 35% of advisers further report that some of their clients have stopped or reduced pension contributions. This is a concern and advisers can again add significant value through ensuring clients understand the long-term impact of making changes to their pension contributions and helping them generate additional income where needed in the most tax efficient way. For those clients who are adjusting plans to help their wider family, considerations as whether these are gifts or loans is another area that might need careful financial planning and advice.

Revelations

1. Consumer Duty

The number of advisers who think that this will have a high impact on their business has risen from 25% to 41% since the last survey. The May 2023 survey was completed prior to the implementation deadline and clearly the work required to comply with The Duty has resulted in a change of view. Most advisers also indicated that the key priority for them for the continual implementation of The Consumer Duty in 2024 will be the ongoing assessment of fair value using customer feedback. Many advisers are looking for help and support. At Benchmark Capital, we have a rigorous process for this following some work undertaken with Boring Money and are always happy to share the thinking. I think the summary here is the implementation of The Consumer Duty is about evolution and not revolution.

2. Adviser fees

44% of advisers indicated that they feel a downward pressure on fees. However, the number of advisers charging between 0.5% and 0.75%, on an ongoing basis, has sharply increased from 37% to 53%. This has been at the expense of those charging less than 0.5% so we are not really seeing this pressure translate into change.

69% (an increase of 10% since May 2023) also indicated that The Consumer Duty would put pressure on the ongoing advice charging model. We are starting to see some subscription models and hybrid models emerge in this area, so this is definitely one to review over the next few years.

3. Wealth transfer

The landscape here continues to be challenging and despite much noise on this topic, 84% of advisers still have no strategy for younger clients. The number of advisers prepared to advise clients with less than £50k to invest has reduced to an all-time low of only 25% (from 52% back in 2019). Perhaps the proposed advice guidance boundaries work being undertaken by the FCA will help to address this?

Furthermore, 90% of advisers have no strategy for advising or retaining women. A separate survey by Schroders recently indicated that only 34% of widows currently inheriting wealth will remain with the adviser. And with the current lateral transfer of wealth in the baby boomer generation, this pattern of behaviour could become a challenge for some adviser firms.[2]

4. Artificial Intelligence

It's probably no surprise that this is now firmly on the radar for many advice firms, but perhaps the pace of change is more unexpected. 70% of advisers now think that AI technology such as ChatGPT presents an opportunity for their business - a significant rise from 57% in May 2023. 73% also believe that they will implement this in some way into their advice process in the next 5 years. 17% of those believing that this can be achieved in the next year! The key area where they believe this would be helpful would be to increase efficiency and automation; definitely be one to watch in 2024.

Click here to discover more insights from the latest adviser survey.

[1] Stocks represented by Ibbotson© SBBI© US Large-Cap Stocks, cash by Ibbotson© SBBI© US (30-day) Treasury Bills. Data January 1926-December 2022. Source: Morningstar Direct, accessed via CFA Institute and Schroders.

[2] Source: Women and Financial Advice - Schroders and Ad Lucem October 2023

Important information

The views and opinions contained herein are those of Benchmark. They do not necessarily represent views expressed or reflected in other Benchmark communications, strategies or funds and are subject to change. This document is intended to be for information purposes only and it is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Information herein is believed to be reliable, but Benchmark does not warrant its completeness or accuracy. The data has been sourced by Benchmark and should be independently verified before further publication or use. No responsibility can be accepted for error of fact or opinion. Benchmark is not responsible for the accuracy of the information contained within linked sites. Reliance should not be placed on the views and information in the document when taking individual investment and/or strategic decisions. Past Performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested.

Issued by Benchmark Capital Limited, Registered Office: Broadlands Business Campus, Langhurst Wood Road, Horsham, West Sussex, England, RH12 4QP. Registered in England and Wales No 09404621

Authors

Gillian Hepburn
Commercial Director

Topics

Benchmark Capital Limited, Registered Office: Broadlands Business Campus, Langhurst Wood Road, Horsham, West Sussex, England, RH12 4QP. Registered in England and Wales No 09404621

Best Practice IFA Group Limited is authorised and regulated by the Financial Conduct Authority, the registration number is 223112. Registered Office: Broadlands Business Campus, Langhurst Wood Road, Horsham, West Sussex, England, RH12 4QP. Registered in England and Wales No 04490633

Evolution Wealth Network Limited is authorised and regulated by the Financial Conduct Authority, the registration number is 591218. Registered office: Broadlands Business Campus, Langhurst Wood Road, Horsham, West Sussex, England, RH12 4QP. Registered in England and Wales No 08229133

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