2015 has been another year of change for the financial advice market, but what will 2016 bring? IRESS looks ahead and sees regulation, robo-advice and accelerating digital adoption as the big headlines for the year.
In the UK, we are widely recognised as having a preoccupation with talking about the weather – largely due to its changeable nature. In financial services, it is also change that dominates our lives and the past twelve months have been no exception to this with the industry adapting to unprecedented pension reforms.
Looking ahead to what will be in store over the next twelve months; we expect to see two key themes feature prominently across the industry, regulatory change and an acceleration in the shift towards digital. These will shape how the industry evolves and the challenges it faces in 2016.
Regulation will again be a key driver of change. The outcome of the FAMR, due to be announced at the time of the 2016 Budget, will undoubtedly have a significant impact. We are expecting the final outcomes to provide a boost to those firms seeking to deliver financial advice to the mass-market. Yet, this is not the sole regulatory change 2016 will see. We also expect to see further policy modifications in pensions, whether to pensions tax-relief, the lifetime allowance, or more wholesale reforms to the system. The consultation and rule making processes for MiFID II will also play a role in dictating the business agenda for the securities and investments industry, despite it being likely to be delayed until 2017.
Addressing regulatory challenges should remain a priority for intermediaries, providers and technology suppliers alike. However, they will also need to focus their attention on the accelerating shift towards digital. There is a strong drive for financial services to align with consumer expectations of engagement, making digital an increasingly hot topic. We have seen this come to light in 2015 with the concept of robo-advice gaining traction within the industry. But, it’s all too easy to talk about robo-advice as a distinct channel. For us, the key differentiator, for both distributors and tech suppliers, will be not to think too narrowly. Robo will rapidly become part of a broader digital engagement model, which includes multi-channel, multi-device interactions, personalised rich-content, portfolio monitoring, customer servicing and the integrated use of social media. We see the discussion and developments around this being a key feature for 2016, so watch out for more debate on robo-advice and the wider digital sphere and where this fits into the adviser landscape.
Overall, we expect the financial services market to face another year of adapting to regulatory, behavioural and economic pressures. And, the response we expect? An increasing adoption of unified, flexible and inter-connected technology solutions.
IRESS is the leading software provider to the financial services industry, known best for its market-leading solutions including The Exchange, XPLAN, Trigold and MSO.