An overwhelming majority of financial advisers in the UK say the industry faces more risks now, with compliance being the biggest concern.
A study by Canada Life revealed that almost three quarters of advisers [71%] believe that overall risks to adviser businesses are greater now than they were five years ago, with only 2% saying they are lower.
Advisers cite compliance [72%], economic uncertainty [50%], time management [47%] and cyber security [38%] as the biggest risks facing them at present.
The range of challenges in front of advisers is massive"
Neil Jones, tax and wealth specialist at Canada Life, said: "The range of challenges in front of advisers is massive - they need to cut costs, reduce compliance burden through efficiency, appeal to an always-on generation wanting always-on answers, and defend themselves from cybercrime, to name just a few."
Most advisers have decided to use technology to mitigate most of these risks and cut costs.
Neil Jones added: "Risks are moving smaller advisory firms to embrace technology at unprecedented levels. There is some low hanging fruit for advisers, with automating part of the back-end business being one example. Potentially this can help increase efficiency, cut costs and, done right, may help reduce the regulatory hassle by automating part of the compliance burden.
"The challenge for smaller firms will be achieving this while keeping a tight lid on costs. Unlike larger firms, they're a lot less likely to be able to employ a full time, IT specialist in house. Freelance wealth IT specialists could find themselves increasingly in-demand in the coming years.
"Outside of technology there are some intriguing strategies at work. Interestingly, over a third see disclosing their margins and costs as a risk strategy. This implies a level of trust in their clients - by being open about profits and costs clients can understand exactly how much bang they are getting for their buck. To this extent, RDR has had a positive effect in terms of levelling the playing field for transparent costs."