The end of the year provides a perfect opportunity to reflect.
Here, I want to explore what 2024 has brought for the advice sector and what key issues advisers will be carrying into 2025.
Three major things come to mind.
1. Regulation
No surprises to see regulation take centre stage again in 2024.
July marked the first anniversary of the Consumer Duty, which is fairly described as one of the biggest policy developments in recent years.
This period has been defined by ‘embedding and learning’, with a few bumps in the road for the advice sector.
The Consumer Duty added to already long to-do lists, particularly for smaller or sole trader firms
There is not a firm I speak to that isn’t committed to delivering great outcomes for clients. But for some businesses, implementing it will have been frustrating because of the administrative burden that comes with change.
It will have also added to already long to-do lists, particularly for smaller or sole trader firms.
As a sector, we’re learning lessons and developing best practice every day. What we’re hoping for now, as we move into a new year, is continued guidance from the Financial Conduct Authority on what great looks like. Having this on top of their lived experienced will only make it easier.
Beyond the Consumer Duty, the culmination of the FCA’s thematic review of retirement income advice was also a milestone. Its recommendations, from consistent risk profiling to demonstrating advice suitability, will be an ongoing area of review for firms.
And we’ll all be holding our breath for the next stage of the Advice Guidance Boundary Review.
2. Operational pressures
Throughout 2024, firms have faced a convergence of headwinds.
Regulatory pressure has been one; cost inflation another. And costs are something that could continue to rise for some firms on the back of planned increases to employers’ National Insurance and the National Living Wage next April.
As the government continues to set out its stall, we hope it keeps consensus and consistency in mind
But there’s also been significant political volatility.
The general election, followed by the Budget, generated a miasma of uncertainty that strained advisers’ capacity by requiring them to spend additional time helping clients interpret and plan around the possibility of potentially significant policy changes.
Some clarity is now in place. But as the government continues to set out its stall, we hope it keeps consensus and consistency in mind. After all, the foundation to good long-term planning is certainty.
That’s not to say change shouldn’t be considered and that it wouldn’t be welcomed by the sector.
We hope the government takes the opportunity to continue to work with the sector to shape its future plans
A survey of advice professionals we conducted just before the Budget revealed many areas where advisers, paraplanners and business owners would value action from the chancellor to support the financial wellbeing of the UK population as a whole.
These ranged from measures to incentivise pension saving – including among the self-employed and the young – to simplifying inheritance tax.
But, with the goal of minimising operational pressures in mind, what advisers would also value is being involved in these decisions.
We hope the government takes the opportunity to continue to work with the sector to shape its future plans. This won’t just help deliver better policy but will, crucially, give firms a better indication as to policymakers’ direction of travel – minimising occurrences of resource-sapping, plan-busting shocks.
3. Evolving the way we work
Finally, as a sector, we’ve continued to grapple with some fundamental questions.
One is how we continue to work better as an ecosystem.
Something I’ve talked a lot about this year, including here in this column, is integration. It’s something that will unlock real opportunity for advisers.
Integration isn’t a focus that will, or should, be left in 2024
Let’s be clear – as a sector, we still have a way to go. But by starting to think more and more about what ‘good’ integration looks like, we’re moving in the right direction. This isn’t a focus that will, or should, be left in 2024.
And then there’s the question of how we as a sector continue to attract and develop talent.
The importance of this can be seen in the fact that when, in our pre-Budget poll, we asked advice professionals what they would most like to see from the chancellor to support their own businesses, two of the most frequently cited factors were people-related: increased funding for apprenticeships and measures to support investment in team training.
A focus on talent and skills will continue to be an imperative into 2025. And it will continue to be something that requires industry-wide action. I’ve been vocal about what I see as the need for greater diversity in the sector, which is absolutely something we all can, and should, get involved in.
Last but by no means least, I’ve talked about what I see as a greater opportunity for the advice sector to engage with the education system directly to help profile advice as a rewarding career – another opportunity for cross-industry engagement.
It benefits us all, if we can get it right.
Noel Butwell is chief executive officer at Abrdn Adviser
No mention of regulation taking centre stage is even half complete without drawing attention to the FCA’s never-ending list of failures, mainly those arising from its failure to act on information received regarding looming train wrecks, despite claiming to be (but plainly lying about) keen to encourage whistle blows. The most recent of these (to my knowledge) is WealthTek, on which an APPG has called for an official investigation which, like all those before it, will probably be ignored by the Treasury. Why is this?