British IFAs can learn lessons from their US counterparts, according to JPMorgan Asset Management.
JPMAM says its new IFA research illustrated similar pressures between UK advisers and those across the Atlantic.
The survey of over 200 UK IFAs found parallels to a 2005 report of the American advisory sector, which revealed issues IFAs expect to be confronted with in the coming years.
Despite the larger size of the US market, JPMAM says the subjects faced are alike. These include:
- The need for sophisticated advice due to limited state retirement support
- The common acceptance of equity investment and complex savings products
- The highly-regulated independent advice sector concept
JPMAM says the research suggests investors in both countries seek more transparency and ease navigating in the market, greater cost of advice clarity and more understanding of investment tools and charging structures.
It also showed UK IFAs are experiencing the same pressures seen by US advisers late last decade, JPMAM says.
They include new market entrants, traditional competitor repackaging, technology use, advisory ownership, experienced advice professionals and operating costs.
JPMAM says even though smaller less profitable firms are struggling in the US, a niche market with value-added client service can “survive and flourish”.
It says the same can be true for the UK, as long as businesses are efficient and profitable enough to protect clients and be innovative.
“Our studies into both the US and UK markets reveal that size is proving to be a key factor in the survival of the US advisory sector,” JPMAM UK sales head Jasper Berens says.
“However in the UK, we believe that smaller local advisory firms can still prosper as long as their client proposition is clear and they are operationally efficient – the effects of not being this way in the US may lead to smaller companies being swallowed up by larger players.”
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