In the financial services sector, we’re constantly adapting to regulatory changes as new rules come into place and the landscape shifts. Often, these changes help to improve the level of service we offer our clients.

For instance, back in 2012, the Retail Distribution Review (RDR) increased the level of qualification that independent financial planners and advisers require. It also specified that financial professionals must charge directly for their services rather than earning commission from product providers.

In response to this new legislation, many retail banks largely exited the advice market and only continued working with ultra high net worth clients.

However, it appears that certain banks are planning to re-enter the advice space as the number of retail investors grows.

The number of retail investors increased during the Covid-19 pandemic and beyond

During the Covid-19 pandemic, more consumers started investing for the first time. According to the Lords Library, the percentage of UK adults holding investments increased from 33% in February 2020 to 37% in May 2022. By 2023, 39% of adults were actively investing.

This increased interest in investing created more demand for banks, and most now offer various investment products through Stocks and Shares ISAs or General Investment Accounts (GIAs). Additionally, many banks have created their own ready-made investment portfolios for consumers.

All of the above made it easier for consumers to purchase and manage investments themselves, often using a simple application on their smartphone.

HSBC plans to double its assets under management to £100 billion in the next 5 years

Now that more consumers are investing, banks are making plans to increase their direct involvement in the advice market.

For instance, according to Money Marketing, HSBC is planning to double its assets under management to £100 billion in the next five years, making it one of the top five wealth managers in the UK.

Other banks have also floated plans to provide more investment advice to consumers.

In 2024, Barclays set out five suggestions for public policy changes that would help banks encourage savers to invest more. One of their proposals was that banks should be able to offer investment recommendations to customers on a “people like you” basis. Essentially, this means they would group clients based on characteristic, such as age, and make suggestions about the kinds of investments that might be suitable for those people.

As a result of these changes, some clients might wonder whether they need to work with a financial planner at all, or if they could manage their own investments and rely on ready-made advice from retail banks.

While this is an option they are free to take, there are several key benefits of working with a financial planner that retail banks can’t offer.

A financial planner can understand your clients’ unique goals

When we start working with a new client, our initial meetings focus on their ambitions for life. We’ll talk about what kind of lifestyle they want to lead now and in retirement, and any big dreams they might have, such as buying a holiday home or starting a business.

Understanding the unique wants and needs of the client is at the core of what we do. Once we have a clear picture of their aims, we’ll construct a comprehensive financial plan to help them achieve everything that’s important to them – with protection, investments, and pensions advice all tied in.

In comparison, retail banks offer one-size-fits-all options. When investing in a ready-made portfolio, clients might have the choice of “low-, medium-, or high-risk” but their specific goals aren’t considered.

Even if banks were to introduce recommendations on a “people like you” basis, this likely wouldn’t help clients create a financial plan that’s right for them. For instance, they may receive recommendations based on their age and stage of life, but two people in their 50s could have wildly different priorities.

One might be planning to downsize their home, retire early, and travel the world. Meanwhile, another client may be a business owner hoping to retain an active role in the company for another decade and spend time at home with family.

These two people would require very different financial plans to achieve their desired lifestyle, and general recommendations or ready-made portfolios likely wouldn’t offer this. Alternatively, a qualified financial planner who understands their individual priorities could.

Professional financial planners can explain complex topics in clear terms

It may be simpler than ever for clients to purchase investments through a Stocks and Shares ISA or a GIA, but they may not understand what they’re investing in.

Retail banks provide all the necessary investment paperwork, but many clients might not know what different types of investments are or how to determine the level of risk they adopt. This could make it difficult to select investments that are suitable for their financial plan. In some cases, clients could also open themselves up to unnecessary risk when choosing their own investments.

One of the biggest benefits of working with a financial planner is that we can explain complex financial topics in clear terms. This means that our clients fully understand what they’re investing in, and the level of risk they adopt.

Ultimately, this means we can support them in building a portfolio that aligns with their priorities in life and their attitude to risk.

We can offer reassurance and guidance during difficult times

Periods of market volatility can cause a lot of anxiety for investors. If your clients see the value of their portfolio fall, they might worry about their future financial security and ability to achieve their desired lifestyle.

Consequently, clients may panic and consider changing their investment strategy. Some might decide to cut their losses and move to cash instead, which could make it more difficult to generate meaningful long-term growth.

Retail banks might send general communications advising clients to remain calm during periods of volatility, but this won’t necessarily offer much reassurance.

Conversely, we can use cashflow planning to show clients how their investments are growing over time. Often, these projections demonstrate that, despite short-term fluctuations, they’re still on track to achieve their desired lifestyle. Plus, we conduct annual reviews with all our clients, giving them the opportunity to voice their concerns face-to-face.

This reassurance may prevent a client from making reactionary decisions that hinder their financial plan. Our support could help them feel more confident about their finances and reduce anxiety.

Get in touch

If your clients want to explore the unique benefits of financial planning, we are here for them.

They can contact us at hello@ardentuk.com or call or WhatsApp us on 01904 655 330. As an award-winning financial advice company with advisers included in the 2024 VouchedFor Top Rated guide, you can be sure that we’re a bona fide company providing excellent advice and high-quality service.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.

The Financial Conduct Authority does not regulate cashflow planning.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.