Looking back at their careers, 42% of our key influencers see regulation as the biggest driver of change (see p41) and it remains at the top of the list in terms of the biggest future challenge, with a quarter naming it as the number-one issue for them (p56).
Many link the need to build – or rebuild – consumer trust and confidence in the sector with the expected impact of regulation. They want regulation to drive better behaviour and practice and help the industry weed out the cowboy firms, poor products and bad advice.
This view is summed up by David White, managing director of QB Partners: “Regulation is being implemented at an increased pace and is bringing some challenges to the industry. However, change is inevitable and regulation can benefit the industry as well as consumers if implemented sensibly and with open communication between regulators and industry.”
While complaints about the cost and complexity of regulation surface from time to time in some of the comments, the overall attitude of our industry leaders to regulation is positive, perhaps surprisingly so (p104). Not only do they want to embrace regulation to help the sector but they also see regulation as a potential catalyst for overhauling their own businesses to make them fit to meet other future challenges.
“The level of regulatory change remains a challenge but one that the industry is used to dealing with. Transforming traditional business models to serve the needs of current and future-generation customers is both a challenge and a wonderful opportunity to break away from industry norms,” says Sean Christian, managing director and executive director – international businesses, Canada Life International.
The rise of ‘robo’ advice alongside the growth of mobile apps and the impact such developments will have on distribution models are another group of challenges that loom large on the horizon. This is a view held by leading advisers and product providers alike.
“Technology and distribution are inextricably linked. New technology will undoubtedly help individual risk assessment but it will impact the way in which the business is distributed as well,” says Giorio Daboni, chief executive of Generali Worldwide.
There is, of course, a powerful belief in the value of advice and the need to ensure it continues to play a key role in providing clients with what they need. There is, however, no room for complacency, warns James Pearcy-Caldwell, chief executive, OpesFidelio & Aisa International, in a comment that chimes with many.
“Clients interacting with modern tech and apps that will lead them to conclude they can do it themselves without the need for costly advice will be a challenge equal to regulation. The ability to create and demonstrate value for clients and justify costs must not be underestimated,” he says.
Craig Featherby, chief executive of Carrick Wealth in South Africa, brings it back to that key challenge of trust: “To empower clients to make better decisions by providing relevant and specific advice. Despite the threat of fintech, clients still rely on relationships built on trust.”
Other issues are also lighting up on the industry’s radar screen with some of the challenges around demographic change and the need to ensure that good quality post-retirement advice also delivers intergenerational fairness concerning some.
Broader issues feature, too, such as the rise of crypto-currencies and the blockchain technology that supports them and, especially among UK and European advisers, Brexit.