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Clients value advice during pandemic

Many advised clients are sticking with their financial planners as COVID-19 tests the resilience of practices, according to Investment Trends.

The latest study from the research house surveyed nearly 700 financial advisers in May at the height of the global pandemic and found that while advisers have minimised client attrition, this unfortunately has not translated to maintaining profitability.

A record high of 41% advisers said their practice was less profitable compared to last year (38%). In 2018, only a minimal number of advisers (18%) grappled with remaining profitable, the report showed.

The pandemic has fueled a number of challenges advisers were facing, including meeting compliance obligations, which is a bugbear for the majority (67%), and providing affordable advice, which almost half of advisers struggle with (46%).

The advice practices that were able to rise above these challenges and stay afloat in terms net profit, and client and profitability growth were more adept at handling compliance-related obligations via technological efficiency.

"These high performing practices were also far more likely to be prepared for COVID-19 related disruptions from a technology and operations perspective, highlighting the importance for all planners to optimise their technology stack for operational and client-facing benefits," research director at Investment Trends Recep Peker said.

Interestingly, the report found a growing cohort of self-licensed planners.

Almost a third of advisers currently hold their own AFSL or operating in a boutique AFSL, showing a two-fold increase since 2016.

"More planners are heading down the self-licensing route, whether by choice or structural changes in the industry. As the dynamics of the advice market evolve, so do planners' support and service needs," he said.

A staggering number of self-licensed advisers (92%) outsource or use third-party expertise for compliance and audits services, research, professional development and paraplanning. Support needs that are being unmet revolve around developing effective advice/review processes, best-practice examples and technical support.

Read more: Investment Trends Recep Peker
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