This week, UK-based investment manager Schroders released its UK Financial Advisor Survey 2024, conducted online between 23 October and 5 November 2024, and completed by 293 UK advisors. 

Investors are moving away from cash and reallocating back to equities, according to the 2024 Schroders UK Financial Advisor Survey. 

This marks the 15th year of the survey, which has captured the advisor landscape. The findings reflect a contrast to the original results identified back in 2009, where advisors predominantly preferred bonds over equities when recommending asset classes to their clients.

The survey reveals a shift from holding cash back to investing. The percentage of advisors reporting that their clients are now investing or considering investing has risen to 67 per cent, an increase from 49 per cent in May.  

This trend aligns with advisors' anticipated allocation strategies for the coming 12 months, which highlights a clear move away from cash. Although bonds still feature as they did 15 years ago, 36 per cent of advisors now anticipate increasing their allocations to UK equities and 34 per cent to developed international equities, the survey shows.

Advisors are cautiously optimistic about market performance, with 23 per cent expecting higher equity returns compared with long-term historical averages. Additionally, 57 per cent anticipate increased global growth. However, this optimism is tempered by concerns over potential volatility, with 70 per cent expecting heightened geopolitical disruptions over the next five years and 43 per cent predicting higher market volatility. 

The background environment may have affected client sentiment, as the percentage of advisors reporting a bullish outlook among their clients has decreased to 34 per cent, down from 41 per cent in May 2024. Nonetheless, this figure remains higher than the 17 per cent recorded in November 2023.

Regulation
Regulation continues to be the primary concern for advisors as we move into 2025. This issue has increased in importance, with the number of advisors ranking it their number one concern rising from 32 per cent in 2022 to 49 per cent in 2023. A contributing factor has been the introduction of the Consumer Duty, with 42 per cent of advisors believing that it will have a high or reasonably high impact on their business, compared with 25 per cent two months before its introduction back in May 2023, the survey reveals.

Additionally, factors such as annual client reviews and the Retirement Income Review may be contributing to this heightened focus on regulation. Following the Financial Conduct Authority’s (FCA) thematic review of Retirement Income Advice, 65 per cent of advisors have now reassessed their proposition, an increase from 33 per cent in May this year. 

Additionally, there has been a notable shift towards prioritising servicing existing clients, now ranked as the second most pressing concern which may be indicative of the focus on annual client reviews.

Wealth transfer
The survey highlighted a continuing concern among advisors regarding intergenerational wealth transfer, with 62 per cent concerned about losing assets as wealth transfers across the generations. Just over half are reporting an increase in the average age of their clients over the past five years.

However, only 20 per cent have developed a tailored sales and marketing strategy aimed at younger investors. Moreover, there has been a sharp decline in the proportion of advisors willing to accept new clients with less than £50,000, which now stands at 26 per cent. Conversely, those willing to take on new clients with over £200,000 has risen to 24 per cent, up from just 10 per cent in 2020.

The percentage of advisors with a dedicated sales and marketing strategy for retaining, attracting, and advising female clients has experienced a modest rise, from 10 per cent last year to 12 per cent. However, research from Schroders identifies a disconnect in this area, with only 34 per cent of women indicating that they would continue with their family advisor in the event of their partner's death. 

Outsourcing
The survey results also revealed that, in response to Consumer Duty, 35 per cent of advisors are looking to increase the use of outsourced discretionary model portfolios. Among those who do outsource, there has been a rise in expected allocations to multi-asset funds, rising from 27 per cent to 35 per cent compared with the same time last year.

Artificial intelligence
Artificial intelligence remains high on the agenda for advisors, the survey shows. More advisors are adopting AI, with only 10 per cent stating that they do not expect to use it, a decrease from 27 per cent in May 2023. Additionally, the survey revealed that 21 per cent have already implemented some form of AI technology.

“The market landscape has seen a number of shifts over the last 15 years, presenting challenging conditions for investors,” Jamie Fowler, head of regional and advisory sales at Schroders, said. “It is particularly encouraging to see this year's results reflecting a renewed sentiment towards investing, with advisors increasingly focusing on equities and seeing opportunities especially within the UK,” she added. “While clients are generally more bullish, a substantial proportion still remains neutral, highlighting the critical role of advisors in navigating ongoing volatility and enhancing clients' understanding of their investment choices." 

“This year’s survey also highlights the increasing impact of regulation on advisors and their businesses. Factors such as Consumer Duty, the Retirement Income Review, Dear CEO letters, and the emphasis on annual client reviews have all contributed to increased pressure and concern within the industry. At Benchmark, we believe that this has been a key driver for the growth in our advisor network during 2024,” Gillian Hepburn, commercial director at Benchmark, part of the Schroders Group, said.