Consumer duty will be the biggest consideration for advisers in 2023, an investment specialist has said.
Andrew Aldridge, partner at Deepbridge, said this new regulation, which regulated companies had to have produced an implementation plan by October 31 2022, would be the "biggest change for advisers to deal with since the retail distribution review".
Aldridge said: "Consumer duty means that many advisers will be getting to grips with the rules for a while to come.
"There may be asset types which advisers now need to have a better understanding of, to be able to demonstrate their considerations for client outcomes, and may need to undertake further training."
He said that, thankfully, for the likes of more complicated investment products and tax structures such as enterprise investment schemes, venture capital trusts and understanding business relief, there was "some great training available".
But consumer duty has much wider ramifications, not just in the investment market.
According to Richard Pike, Phoebus Software’s chief sales and marketing officer, mortgage advice must also factor in the consumer duty regulations.
Pike said: "There will be questions of long-term affordability and the likelihood of an increase in the number of mortgages going into default.
"Using all the tools at [advisers'] disposal will be key. Having the right technology in place at this point will ensure that lender personnel are there at the front end to aid vulnerable borrowers.
"This is especially important now that the industry is being held accountable by the FCA’s consumer duty principles.”
Growth
The second big challenge for 2023 will be finding growth, especially after a turbulent 2022.
Aldridge said most advisers have been through recessions before and know the routine, which was to keep "reassuring clients until the markets return to growth".
But finding that growth might take more than reassurance.
Some companies have predicted which growth stocks might dominate in 2023.
Michael Hewson, chief market analyst at CMC Markets said: “Google and Facebook are dominating as the most popular growth stocks across Europe.
"Both of these companies have a huge influence on the market, and the media, which is why many Europeans are looking to invest in them."
Wealth preservation
Despite the recent economic doom and gloom, inheritance tax receipts continue to grow.
As reported by FTAdviser, HM Revenue & Customs' IHT receipts for April 2022 to September 2022 were £3.5bn – £0.4bn higher than the same period a year earlier.
This means estate planning continues to be a priority for many clients, with the Autumn Budget again highlighting the importance of prudent planning.
In 2021, the Deepbridge Estate Planning Service undertook a survey of advisers which found that, for up to 80 per cent of advised clients, IHT planning was a primary consideration and 78 per cent of advisers regularly use business relief propositions for this purpose.
