EY predicts gloomy outlook for UK advisers post-Brexit

Added 2nd August 2016

Financial advisers are in for a tough time following the UK’s vote to leave the European Union, according to a report from professional services firm EY.

EY predicts gloomy outlook for UK advisers post-Brexit

The firm forecast that total assets under management (AUM) in the wealth management industry will grow at a slower rate of 1.5% between 2016 and 2019 - compared to 7.7% in 2015.

This is due to increased investor uncertainty and a deteriorating economic outlook for the UK.

Fees would also come under pressure, said the EY ITEM club outlook.

Meanwhile, life insurance will see a stronger growth, with insurance premium income set to rise 2% in 2017, albeit down from 3.4% in 2015. 

The demand for annuities will be depressed as the 20-year gilt yield will average only 1.9% in 2017 compared to almost 4% over the last decade.

Omar Ali, UK financial services managing partner at EY, said each financial sector faces “unique pressures” given the UK dire economic predictions.

Declining economic growth

Latest forecasts from EY put the UK’s economic growth at of 2.6% for this year and 2.3% for 2017, having been revised down to 1.9% and 0.4% respectively following the referendum. 

For 2018 the forecast has been cut from 2.2% to 1.4%. Unemployment is predicted to rise to 7% and disposable household incomes will rise by only 1.5% in 2017.

“Undoubtedly, the landscape in which financial services firms are operating has altered - consumers and businesses are going to think twice before they borrow, and be careful about what they invest in.  It also looks like low interest rates – which affect all sectors - are here to stay,” said Ali.

However, Ali added that the economic pressures are not that different from what “the industry has been contending with over the past eight years” amid a persistently low rate environment in the aftermath of 2007-2008 recession.

“In fact, thanks to the rigour instilled in their businesses through the crisis, the financial services industry is probably amongst the sectors best placed to deal with this within the UK,” he said.

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What a surprise!!

It is amazing how quickly these firms project gloom and you publish them boosting public awareness of minor companies but if it comes to anything positive it never seems to appear in these articles. You can project anything using selected data but by the time we reach the time when the data can be checked, this report will be forgotten. It would be nice to see some of the positive analysis being publicised instead of the permanently negative media.

Posted by: Richard Green, 02 Aug 2016

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Monira Matin

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Monira joined International Adviser in March 2016 from Informa Global Markets where she worked as a eurobond reporter for over two years, covering fixed income markets. She has previously held a number of editorial positions covering politics, insurance and technology. Monira has a degree in Journalism and Economics from City University.

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