The cost and uncertainty of regulation and compliance remains
the biggest threat to the success of financial advice firms,
according to a Personal Finance Society (PFS) survey.
As part of the professional body's 2016 Member Survey, three
quarters of financial adviser's identified the impact of regulatory
and compliance costs as one of the biggest threats to their
business over the next 1-3 years (75%), up from 72% in 2015 and 67%
It is the fifth year in a row that regulation and compliance
costs have topped the survey's list of major concerns facing the
financial advice profession.
PFS chief executive Keith Richards said: "Despite the efforts of
regulators and government, through the introduction of the
Financial Advice Market Review (FAMR), to assure the sector that it
will tackle regulatory barriers and costs in order to help increase
access to advice, it is clear there is more to be done through the
introduction of tangible change."
"The barriers created by inefficient and burdensome regulation
continue to strangle the personal finance sector, thereby
restricting consumer access to the financial advice marketplace,
leaving millions unprotected and left to fend for themselves."
"As the FCA and government continue to consult on key proposals
resulting from last year's FAMR, I'd urge them to act on the
feedback and pragmatic solutions offered by the sector on how best
to address the barriers, and introduce meaningful change which will
in turn assist millions of consumers in their long-term life
Brexit and a general economic slowdown was the second biggest
threat identified by PFS members surveyed (34%). A similar number
of respondents identified execution only and online simplified
advice as a major threat to their business (33%), up from 22% in
Complications from implementing EU regulations (29%) and a lack
of new talent/available skilled trainees (22%) were also identified
as major threats in the short term.
More than 1,600 PFS members responded to the professional
body's2016 Member Survey, which was conducted between 11 October
and 8 November, and asked a series of questions about PFS services
and the general business and economic environment.
Opportunities arising from the Government's pension reforms were
considered the biggest opportunity for advice firms in the next 1-3
years (59%), followed by referrals from professional connections
(48%) and higher professional standards (36%).
While the ranking of the three biggest opportunities remained
unchanged from 2015, advisers were much more downbeat about the
short-term prospects for economic growth. Just one in five advisers
identified economic growth as an opportunity for their business in
the next 1-3 years (21%), down from 40% in 2015.