The past year was largely dominated by the Financial Conduct Authority’s consumer duty, and this was the elephant in the room for most conversations.
Speaking to FT Adviser, Lee Hartley, chief executive officer of Fairstone, said it felt like quite some time since there has been a year which could be called "business-as-usual".
In the ever-changing landscape of UK wealth, this always seems to be compounded by a number of other factors, he explained.
“For 2023 the stand-out event we all had to accommodate is obviously the implementation of consumer duty.
“For a while there were rumblings that this was just going to be ‘TCF – The Sequel’ but as the year unfolded, we could see that consumer duty is actually far more than that.
“I think consumer duty marks a step-change in how the regulator plans to oversee our sector and we should not be surprised by a more forceful approach in their expectations of heightened standards from firms both large and small.”
Hartley said the language coming from the FCA is different and if proof was needed that this is genuinely the start of something new then “you simply have to look at the St James’s Place share price”, he said.
“This year’s 42 per cent freefall in market capitalisation will last long in the memory for all the evidence you need.”
One of the other developments that has appeared on the radar in 2023 is artificial intelligence and the speed at which it is entering the wealth sector.
Hartley said it is “staggering” and any assumptions that AI is many years from impacting on mainstream work has quickly evaporated.
“We are now already at the stage where AI has crossed over from minority report to suitability report (no apology offered for that world-class pun), and I expect this rapidly evolving technology to play a bigger and more meaningful part in the financial planning journey once we more fully understand its potential.”
Politics, pricing and convergence
Looking at the next 12 months ahead, Hartley said his forecast for 2024 can be summarised as "politics, pricing and convergence".
On the subject of pricing, Hartley said he anticipates the industry is going to witness a number of firms streamlining their fee charging models and client propositions.
“I can say this with confidence as this is something that is firmly on our own radar,” he said.
“Demonstrating consistency of charging, uniformity of service delivery and value for money is, or at least should be, on everyone’s agenda.
“Clients will be the ultimate beneficiary of these changes as wealth advisory firms look at more ways to deliver tangible value to their end users.”
He argued that consumer duty will be the catalyst for many of these movements and advisers will be looking closely at more ways to manage and reduce costs within the overall investment stack.
