10 Predictions for the Future of UK Financial Planning

1. Robo Advice may not succeed.

There has been a lot of press coverage about Robo Advice. The UK financial services industry is seen as one to the best regulatory frameworks globally. However, it is difficult to see how Automated Advice can be integrated into the current financial Framework. Whilst helpful Robo Advice will not come without risk. The UK regulator has already confirmed that they expect Robo Advice to comply with current advice requirements. I am sceptical it will become a mainstream advice option.

2. No opt out for Auto-enrolment

The UK is facing a pensions time bomb, with people not saving enough for retirement, living longer and the closure of many financial salary pension schemes. I believe the government will eventually be forced to abandon the opt out options for workplace pensions.

3. Cost of Regulation will not reduce

The recent Financial Advice Markets Review covered access to financial advice and the cost of regulation. Although certain sectors of the UK financial service industry may see a fall in the cost of regulation, overall the total cost to the UK will not reduce.

4. Greater access to financial advice

Product innovation and simpler packaged products will become more mainstream. Whichever government is in place the need to encourage people to save rather than spend will become a priority in years ahead.

5. Face to Face Advice preferred option

Face to face independent financial planning will still be the preferred option. People still like to deal with people and although the use of technology will improve the consumer experience, human interaction will still be preferred.

6. Financial Awareness will improve

Education in schools on financial awareness will continue to improve. Eventually it might even become part of the curriculum. Hopefully as financial education become part of the learning experience the UK population will become more financially aware.

7. Money Advice Service review

The Money Advice Service will come under increasing pressure to demonstrate value for money and to show it is improving the financial awareness of the UK population. So far it has failed and it is unlikely to survive in its current format.

8. Product innovation

The industry is adept at developing products to sell to consumers. This has been the case for a long time and will continue to be so. Whether these products will offer value to consumers is another discussion. Consumers need access to simple low cost products and financial advice.

9. Annuities will become popular again

At the present time we are in a low interest rate environment. However, at some point interest rates will normalise, along with Gilt yields. If and when this happens annuity purchase will become more popular again. Now that pensions freedom is over a year old, we are already seeing a slight increase in the number of annuities being purchased.

10. Long Stop will be introduced

The recent Financial Advice Markets Review (FAMR) rejected the introduction of a fifteen year long stop for Financial Advisers. Continued pressure will eventually force the regulatory body to review this although this might not happen for a long time.

These predictions are only my own personal opinion on how the UK financial planning industry might develop over the next few years.