In the vortex of regulatory adjustments and economic fluctuations, financial advisory firms face a pivotal decision: to continue on the well-trodden path of intermediation or to pivot towards a non-intermediating model that outsources such services. This dilemma arises amidst market data suggesting a trend towards outsourcing regulated activities due to the evolving consumer duty regulations.
The recent report by AKG, titled Future of Advice – State of Flux, sheds light on the growing concerns among advisory firms. Attracting new clients has become a Sisyphean task, exacerbated by surging marketing costs and the looming shadow of political and regulatory uncertainties. These pressures are not just theoretical musings but tangible challenges, with 37% of firms voicing concern over regulatory or legislative changes.
This environment has ushered in a pronounced shift in strategic operations, with a significant 64% of advisers anticipating increased mergers and acquisitions within the next few years. Such predictions stem from the industry’s current state, aptly described by Tom Evans of Canada Life as a period of “change and challenges.”
The consumer side of the equation cannot be ignored. A mere quarter of consumers have engaged with a financial adviser in the past half-decade, revealing a disconcerting detachment from professional financial guidance. This detachment, coupled with a projected widening of the advice gap, presents a stark picture of the industry’s future.
In response to these challenges, a compelling argument can be made for firms to consider transforming into non-intermediating entities. By doing so, they could focus on honing their advisory expertise while delegating investment intermediation to third parties. Such a move could enhance efficiency, streamline client service, and adhere to the stringent demands of consumer duty regulations.
The Academy of Life Planning stands at the forefront of this transformative wave. As a pioneering institution, it champions the ethos of empowering individuals and life planners to chart a purposeful life journey. Through comprehensive membership and mentorship services, the Academy furnishes the financial planning community with the tools and knowledge vital for informed decision-making.
By fostering a global network and providing one-to-one coaching, the Academy ensures that life planners are well-equipped to navigate the complexities of the financial landscape. This approach not only addresses the immediate need for adaptation but also safeguards the future of financial advice.
In conclusion, as the industry grapples with the implications of a shifting regulatory and economic paradigm, the transition to non-intermediation augmented by strategic outsourcing emerges as a viable pathway. It promises to bridge the advice gap, align with consumer expectations, and propel the advisory domain towards a sustainable future.
Academy of Life Planning 