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Reflecting on the financial advice landscape in 2023

Written by Julie Greenwood
29 Dec 2023 Reading time: 2 mins

As the financial services sector wraps up the eventful year of 2023, we reflect on a landscape shaped by many factors.

The economic climate at the beginning of the year was uncertain, with global events and geopolitical tensions keeping financial advisers on their toes. The interest rate environment acted like a seesaw, punishing variable rate mortgage holders and slowly boosting returns to savers. Despite inflation softening like a whoopie cushion, the cost-of-living crisis has added another layer of complexity, requiring the bank of Gran and Grandad to allow early inheritance giveaways to support younger family members in addressing rising living expenses.

The delicate dance between risk and reward necessitated robust risk assessment strategies to safeguard clients’ financial well-being amidst the volatile economic landscape. Advisers also reviewed their tax planning toolkits to ensure they could deliver value against explicit and stealth tax changes.

But despite these challenges, 2023 also offered three key reasons to be cheerful:

The chance to do better

The introduction of Consumer Duty shone a spotlight on delivering exceptional customer outcomes. It challenged business models to be thoroughly examined to ensure they serve customers, employees, and businesses alike. It also encouraged advisers to view clients as individuals with diverse financial needs. This shift in perspective prompted a realignment of services with what investors truly seek – feeling secure and supported, transacting with confidence and convenience, and seeking engagement that goes beyond financial transactions.

In this context, storytelling has emerged as a powerful tool for advisers to connect with clients on an emotional level. Unlike traditional approaches that position companies as heroes, compelling storytelling puts clients in the hero’s role. This shift in perspective creates a more engaging and relatable narrative, driving customers to take action.

Technology is a tool, not a replacement

Technology has the potential to empower advisers to take control of their customer proposition and deliver the type of client experience that we have come to expect in other industries. With a focus on reducing the overall cost of the distribution chain, many advisers have embraced technology, allowing them to lower their Total Expense Ratio while maintaining their margin and delivering exceptional
service to their clients.

By integrating technology with a human touch, advisers can create a hybrid approach that reduces administrative burdens, promotes efficiency, and lowers costs, meeting the baseline expectations set by other industries.

Small is beautiful

This year has laid the groundwork for some promising opportunities. Chancellor Jeremy Hunt’s Mansion House reforms aim to attract £50 billion into high-growth assets by 2030, giving UK plc and our entrepreneurs a boost and our pension pots a potential kicker!

What’s more, when the market senses the end of the gloomy times, it will recognise that UK smaller companies are operating at a double discount, with earnings growth and valuations disconnected. This presents a compelling opportunity for investors to capitalise on this discrepancy. As sentiment in UK equities turns, investors are poised to witness a significant bounce in the value of their portfolios.

In conclusion, 2023 has been a year where, once again, financial advisers have demonstrated their mettle and dedication to their clients. As they navigate macroeconomic uncertainties and maximise opportunities like Consumer Duty, technology integration, and impactful storytelling, the sector is well-positioned for a future marked by resilience, innovation, and client-centric success.

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