According to the Financial Conduct Authority, 1 in 24 people in the UK received ongoing financial advice in 2016. This amounts to a substantial year-on-year increase of almost 440,000 new clients in 2016, meaning the financial advice industry is booming.
What does that mean for you as a financial adviser, and how can you and your business capitalise on the growth of the industry?
What it means for financial advisers
There are tons of clients around for those with the market presence and expertise to take them on.
According the FCA, the majority of financial advisers’ revenue in 2016 was related to investment rather than mortgages or insurance – to the tune of 84 per cent. Of this revenue, 71 per cent was generated through fees, while only 26 per cent came from commissions.
Customers looking for investment advice are not what many expected, with 46 per cent of customers having less than £50,000 in their pension pot to invest. This means advisers realistically need to rely on a number of smaller customers rather than a small handful of larger customers. By the time you reach £250,000 in pre-pension freedoms, you have accounted for 92 per cent of the customers looking for pensions advice. Those looking to thrive off a handful of big clients will have serious competition for their custom.
How to capitalise on the growing market
Realistically, you will need to be able to manage as many customers comfortably as possible to capitalise on the growing market. One of the best things you can do is invest in back office systems for financial advisers.
Back office systems for financial advisers focus on allowing you secure access to client information with minimal fuss and time investment, enabling you to give each customer a personalised service without spending hours beforehand reviewing files.
Alongside high-quality back office systems, it’s worth considering that, according the FCA, sole traders made 7 per cent less on average than advisers working in firms, with small firms averaging £130,000 revenue per adviser and larger firms averaging up to £144,000.
With a growing market, larger firms may be better placed to handle more clients, but businesses of all sizes can benefit.