Advisers are posing an “existential threat” to the wealth management industry as more businesses take a slice of the different parts of the distribution chain.
That is one of the findings of consultancy Fundscape’s latest report, which says the advice channel accounts for around half of all industry sales.
Fundscape says advisers and platforms will be the beneficiaries of the shift of assets from pensions to funds over the next 10 years.
In its latest report on UK fund distribution, Fundscape says UK household financial wealth was £6.7trn at the end of 2017 with 55 per cent of that wealth held in pensions.
The consultancy says the average household wealth – currently at around £245,000 – will decline because of higher living costs, the low savings rate in the UK and the erosion of defined benefit pension schemes.
Fundscape chief executive Bella Caridade-Ferreira says: “The long-term outlook for household wealth might be modest, but distribution prospects are much more optimistic.”
She says: “More than half of household wealth is captured in pension entitlements and most of it isn’t in investment funds. We expect a significant proportion of this wealth to transfer into the wealth management industry over the next 10 years.”
Fundscape says advisers and platforms will benefit from this but that advisers also pose a threat to the industry.
This is because they compete by getting discretionary permissions, launching funds and model portfolios, and their own platforms.
A statement from Fundscape says: “From being reliant on fund groups, life companies and platforms as they were in pre-RDR days, [advisers] are now very much masters of their own ecosystems.”