Clapton Consultants, a consultancy for accountants and IFAs has revealed the top five challenges that are likely to affect advisers in the year ahead.
Firstly, Clapton believes that the involvement of so-called ‘micro firms’ in the auto enrolment initiative next year will present a significant challenge for advisers. Although small firms are easier to auto enrol than their larger equivalents, the sheer number will test capacity in a low margin sector while employers and staff will be less than willing to pay for ongoing advice. Collaboration with accountancy firms in this area to spread the burden and reduce costs may be the optimum way to approach this challenge, but many firms are still unsure of the best way to do this.
Secondly, the FAMR has been introduced to explore whether or not there is an advice gap for those who feel they cannot access financial advice or do not value it. Alternatives such as Guidance, Robo-advice and D2C solutions will present significant competitive challenges particularly when targeting younger clients, while continuing regulatory complexity adds to business costs.
Clapton has also identified market volatility as another challenge with markets having remained unstable for the majority of 2015. A combination of factors including China, emerging markets and interest rate rises as we enter the New Year leave very few safe haven options for investors; especially those with a low attitude to risk. Collaboration between advisers and accountants to improve tax efficiency for financial strategies and investment portfolios will improve the net return for clients.
Clapton believes that overcoming common misconceptions will also prove challenging with concern remaining among accountants that collaborating with advisers may have a detrimental impact on their business. However, often the best way to achieve growth is to expand the service offering, taking a more proactive approach using DPB licensing, which costs just GBP251. Clapton says the challenge for advisers is to show how their professionalism and specific product knowledge can enhance the client solution to the benefit of all parties.
Finally, Clapton believes that changes in the buy-to-let landscape could also prove problematic. The Chancellor’s decision to increase stamp duty on Buy to Let and second homes by 3 per cent following his earlier decision to reduce interest rate relief will lead many landlords to reconsider the allocation of their investments. Achieving a comparable, tax efficient return for clients in the current market could present a significant challenge. This offers an opportunity for accountants and advisers to work together to create and effect a tax efficient financial plan to achieve the best possible client outcome.
