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Seven in 10 advisers see increasing risks

Seven in ten advisers warn business risks have increased in past five years, with technology the top mitigation strategy

  • 71% of advisers believe business risks are greater than they were five years ago
  • Key risks include: compliance, economic volatility, time management and cybercrime
  • 43% of advisers see technology as the top strategy for dealing with risks

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, according to new research from Canada Life.

Advisers cite compliance [72%], economic uncertainty [50%], time management [47%] and cyber security [38%] as the biggest risks facing them at present.

Top Five Risks*

Compliance risk 72%
Economic risk e.g. Brexit, market volatility 50%
Time management 47%
Cyber security/crime 38%
Cost disclosure/margins 36%
Managing client expectations 36%
Legal risk 34%
Operational risk 32%
Staffing and retention 25%
Competitive risk 17%

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.”

Technology the answer for advisers combatting risks

Faced with a variety of risks to their businesses, advisers are looking to technology to secure their business prospects and reduce costs.

Top Strategies to Reduce Risk**:

Move to a better technology base 43%
Reduce costs 38%
Cost disclosure/margins 36%
Find richer clientele 25%
Exit certain advice areas 25%

Neil Jones, Tax and Wealth Specialist at Canada Life, said:

“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.”

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Canada Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.

Canada Life International Limited and CLI Institutional Limited are Isle of Man registered companies authorised and regulated by the Isle of Man Financial Services Authority.

Canada Life International Assurance (Ireland) DAC is authorised and regulated by the Central Bank of Ireland.

Stonehaven UK Limited and MGM Advantage Life Limited, trading as Canada Life, are subsidiaries of The Canada Life Group (U.K.) Limited. Stonehaven UK Ltd is authorised and regulated by the Financial Conduct Authority. MGM Advantage Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority.