Just 2% of financial advisers believe that overall business risks have reduced over the past five years, research by Canada Life found.
That compares to a staggering 71% who said that overall risks are higher.
Most advisers (72%) believe that compliance is the biggest challenge they are facing at the moment, followed by economic risk (50%), time management (47%), and cyber security (38%).
Neil Jones, tax and wealth specialist at Canada Life, said: “The range of challenges in front of advisers is massive – they need to cut costs, reduce compliance burden through efficiency, appeal to an always-on generation wanting always-on answers, and defend themselves from cybercrime, to name just a few.”
The life insurer surveyed 185 advisers in June 2019. They were able to provide multiple responses.
Possible solutions
But what can advisers do to reduce these risks?
The majority believes the answer lies within technological innovation, as 43% said that moving to a better technology base would be the best strategy.
Four-in-10 (38%) cited reducing costs, 36% said disclosing costs, followed by 25% who would try to find a richer client base, and another 25% that would exit from certain advice areas.
“Risks are moving smaller advisory firms to embrace technology at unprecedented levels,” Jones added.
“Potentially this can help increase efficiency, cut costs and, done right, may help reduce the regulatory hassle by automating part of the compliance burden.
“The challenge for smaller firms will be achieving this while keeping a tight lid on costs.
“Unlike larger firms, they’re a lot less likely to be able to employ a full-time IT specialist in house. Freelance wealth IT specialists could find themselves increasingly in-demand in the coming years.”
