Navigating through this evolving landscape at the same time as maintaining business profitability can be challenging for advisory firms who are recognising the need to adapt. One area where the industry is witnessing the most change is through the implementation of a centralised investment process.
CHANGE IN REGULATION AND CLIENTS’ ATTITUDES – THE EVOLVING LANDSCAPE
87% of advisers agree that they will need to adapt their business models due to changes in regulation and clients’ attitudes.
Change in the international financial services arena seems to be a constant, with some changes more radical than others. Those changes are now affecting customers’ attitudes and impacting how financial advice is given.
Regulation
Following the financial crisis of 2008, the main focus of regulators was to introduce measures to prevent further problems arising in the international capital markets and banking system.
Regulators have since turned their attention to the financial advice industry. Some markets, such as those in Australia, the UK and South Africa, have already seen considerable change.
Not all international markets are progressing at the same speed but they all seem to be heading in a similar direction: protection of customer outcomes, greater transparency of adviser remuneration and fairness of charges.
A new type of customer
Customer expectations are forcing advisers to move beyond meeting prescribed standards set by local regulators. Greater availability of information and greater sharing of information is aiding customer awareness and improving their understanding. Remuneration models that thrived in the past on a lack of clarity of costs are becoming less sustainable as clients have more information available to assess the value of the service.
Customers are also becoming increasingly mobile, moving to and from different markets. This is leading to the globalisation of the standards they expect, especially with regards to disclosure and transparency.
In its 2016 Middle East Investment Panorama (MEIP), sponsored by Old Mutual International, Insight Discovery highlights that an overwhelming 87% of advisers agree that their businesses will need to evolve in light of changing client demands and regulations.
When asked to identify how clients are changing, 42.7% of advisers note that clients are becoming more knowledgeable, 22.7% agree that clients are expecting greater disclosure and transparency, 17.3% found that they want greater value for money, and 12.7% are becoming increasingly mobile/ globalised.
The same report also reveals that more than a fifth (22.7%) of advisers agree that greater disclosure will trigger a review of their existing business models in order to adapt to this evolving landscape.
