Investment-focussed financial advisers are increasingly looking for ways to change their business model to generate recurring income, with platforms set to play an important role in facilitating this transition, according to new research conducted by Skandia.
The survey of 222 advisers shows that although only 15% of advisers currently have 60% or more of their income recurring on a regular basis, many more advisers plan to move in this direction. In total 88% say they are actively planning to increase the percentage of income that is recurring in the next 12 months.
The survey also shows a clear link between advisers with high levels of recurring income and those making the most use of platforms. Of those advisers with high recurring income, 43% say they write at least half of their business via platforms. In addition, of the 88% of the advisers who say they were actively planning to increase their recurring income over the next 12 months, just over half (53%) also say they are planning to increase their use of platforms.
These results suggest a strong correlation between the way advisers are seeking to be remunerated in the near future and their predicted use of platforms. The predicted increase of platforms in the next 12 months coincides with the number of advisers seeking to increase their levels of recurring income in the next 12 months.
The FSA has clearly stated that advisers must provide ongoing service to justify trail commission or make it clear to their clients that they do not provide this service. The research suggests that many financial advisers are embracing this by looking to move to a model that is based increasingly on ongoing remuneration, whether fees or commission, in return for ongoing financial planning services. This also benefits the adviser by enhancing the longer-term value within their business.