The 2024 Financial Adviser survey by FE fundinfo has provided key insights into the evolving practices of financial advisers in response to the FCA’s Consumer Duty, implemented last year.
The regulation aims to boost consumer protection, necessitating that financial products and services cater to the personal needs of clients, which includes the criteria of transparency and suitability of advice.
One of the standout findings from the survey is that nearly one-third (31%) of advisers currently employ a custom Managed Portfolio Service (MPS) to offer personalized advice, and an additional 13% plan to adopt such services within the next one to three years. This suggests a growing trend towards tailored investment solutions, spurred by the demands for higher service quality and better client outcomes under the Consumer Duty.
Moreover, 18% of advisers have changed their preferences for Centralised Investment Propositions (CIP) or MPS, focusing more on value-for-money investments, underscoring a shift towards more economically efficient service offerings amid heightened scrutiny on fees.
The overall investment in third-party investment solutions has risen, with 45% of respondents noting increased investment in the past year, highlighting a reliance on these providers to mitigate advisory risks.
The survey also reveals the operational challenges faced by advisers, with a significant emphasis on enhancing client communication. While most financial advisers still prefer face-to-face meetings, with 93% conducting annual reviews in person, the use of secure client portals is rising, demonstrating a pivot towards safeguarding client data amidst prevalent security concerns.
Administrative burdens remain a major barrier, with 54% of advisers highlighting the time-consuming nature of administrative tasks as an impediment to effective communication, a challenge compounded by the need for timely client responses, as reported by 69% of the respondents.
FE fundinfo Adviser Product Strategy Lead Stephen Ford noted the substantial impact of the Consumer Duty, stating, “the introduction of Consumer Duty marked a significant milestone for the financial advice sector, setting higher and clearer standards of consumer protection. As advisers navigate this, their role in helping clients navigate complex financial decisions and achieve their long-term goals has never been more critical.”
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