Advisers believe they will struggle to continue providing clients with investment advice, due to the “growing complexities involved in delivering this service, alongside their other responsibilities”, according to a new study by Investec Wealth & Investment.
The research, conducted among UK-based financial advisers, found that almost two-thirds of financial advisers (64%) now believe it will be much harder to keep investment management in-house over the next two years.
Some 82% of the advisers surveyed cited due diligence demands as the key reason why in-house management services will be harder to provide. The lack of a dedicated in-house research team was cited by 63%, “too much administration” by 55%, and insufficient qualifications and regulatory permission by 44%.
A third (34%) of those surveyed in the study, which was conducted across research, 107 UK-based intermediaries in December 2015 and January 2016, said their time would be better spent looking after existing clients and developing new prospects and nearly a quarter (23%) feared that trying to practice investment management internally would destabilise existing client relationships.
Investec’s survey pointed that problem is particularly acute among smaller firms lacking the resources to provide the required level of support across all areas. More than half (52%) of advisers expect smaller intermediary businesses will look at partnering with discretionary investment managers.
Mark Stevens, head of intermediary services, Investec Wealth & Investment, pictured, said: “Advisers have multiple calls on their time and most realise that it will become increasingly difficult to cover all the traditional bases satisfactorily and have any chance of successfully growing their business.
“Advisers are now facing the twin challenges of volatile markets and ongoing compliance and regulatory demands. Conditions will, if anything, become increasingly tougher and more advisers who have yet to outsource key services such as investment management are likely to do so.
When choosing which DIM to partner, the most important criteria for advisers (cited by 82% of respondents) are the quality of service and transparency of charges. These were closely followed by the DIM’s investment performance, costs (both 79%) and security of assets (78%).
Stevens added: “Good quality discretionary investment managers that deliver high quality levels of service are very well equipped to manage these demands and help intermediaries focus on looking after clients.”
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