The weight of financial regulation created by national and global regulators shows few signs of lessening and further changes are seen as the largest immediate threat to business models, a survey of 204 advisors in the UK has found.

The weight of financial regulation created by national and global regulators shows few signs of lessening and further changes are seen as the largest immediate threat to business models, a survey of 204 advisors in the UK has found.

The poll, by Fidelity Worldwide Investment and FundsNetwork, showed that some 69 per cent of respondents said developments such as further regulatory change, increasing costs and time pressure challenged their operations.

However, the vast majority (80 per cent) of advisors said their businesses are “future proofed” against regulatory threats.

More than half of advisors have made more use of model portfolios (29 per cent) and/or managed solutions (25 per cent), perhaps an unsurprising development as advisors seek to cut risks to their businesses. Cutting business risk is cited as the main reason for change by 48 per cent of those polled, followed by 44 per cent of them saying they made such change to benefit from dedicated investment capabilities and resources.

The survey, conducted in late November and early December last year, throws light on how an industry facing a raft of regulation continues to be concerned about how rules are driving business strategy. Last year, the UK sector faced the upheaval of the Retail Distribution Review; at the start of this year, the updated European cluster of financial market rules, or MiFID, took effect.

Models
The survey also found that advisors will continue to increase their use of model portfolios and managed fund solutions during 2014, with bespoke portfolios continuing to see the biggest decline in usage. Some 37 per cent of advisors believe that the proliferation of managed fund solutions is generally a positive development for clients.

Just under two thirds (64 per cent) of advisors said managed solutions provide an easy to understand and robust solution for clients.

The survey also looked at advisors’ views on platforms; it found that ahead of the April 2016 deadline, some 44 per cent of advisors said platforms should help them transfer from bundled to clean share classes by bulk converting their clients automatically. Some 48 per cent of advisors are confident that platforms are doing enough to help them move from bundled to clean share classes in April 2014.