Nearly seven in 10 financial advisers (69%) expect continuing pressure on client fees due to the impact of the Consumer Duty.

The majority of advisers expect the Consumer Duty's fair value requirement will “exert pressure” on ongoing charging models, according to the Schroders UK Financial Adviser Survey 2023.

The survey also revealed that many advised clients grew increasingly bearish in 2023, despite interest rates stabilising and inflation falling, with 59% worried about losing capital.

Advisers were also anxious about the future, according to the survey, with 66% of the advisers surveyed expecting a higher level of disruption due to geopolitical challenges.

The cost-of-living crisis continues to be a key influence on advisers and clients, with 89% of advisers reporting that some of their clients have adjusted their portfolios as a result.

Increasing numbers of advisers say they have had more conversations with clients on the merits of cash versus long-term equity investing. The separate Schroders UK Financial Adviser Pulse Survey in May found that 90% were engaging with clients on this issue. The new adviser survey found that this proportion has now risen to 95%.

In terms of the challenges facing advisers:

• 49% cited regulation as their main concern (up from a third (32%) in November 2022)

• The percentage of advisers who think that the Consumer Duty will have a "high or reasonably high" impact on their business rose from 25% in May to 41% now

• 69% of advisers anticipate that the Consumer Duty's 'fair value' outcome will exert pressure on ongoing charging models. 

In terms of wealth transfer, the surveys identified a growing proportion of advisers concerned their businesses could lose assets as wealth transfers between generations, with the number now at 63%, up from 54% in May 2022.

Despite the changes in the market, attracting younger clients was not a top priority for the majority of advisers. Most prefer to concentrate on older, wealthier clients. Only 25% of advisers would provide advice to clients with less than £50,000 to invest, a steep decline from 52% in 2019.

Only 10% of advisers reported having a strategy for retaining, attracting and advising women.

In terms of Artificial Intelligence there was a a significant rise in the number of advisers who view AI as an opportunity rather than a threat, with 70% now embracing its potential compared to 57% in May. Some 85% of advisers anticipate incorporating AI-based technology applications into their advice process in some capacity in the future.

Advisers are increasingly relying on outsourced investment solutions to manage their clients' assets. Currently, 36% of advisers outsource more than half of their clients' assets under management, while 49% outsource more than a quarter.

Looking ahead, 27% of advisers expect to further boost their allocation to multi-asset funds in the next 12 months and 25% to Model Portfolio Services. Advisers continue to primarily consider performance, followed by cost and investment process when selecting an outsourced investment solution.

Gillian Hepburn, commercial director, Benchmark, Schroders’ adviser arm, said: “According to the survey, advisers are still primarily focusing their efforts on older, wealthier clients, rather than broadening their scope to include women and the younger generation.

“Going forward, we hope to see increased engagement with these client segments, as in addition to addressing the advice gap, it will help to tackle concerns about potential asset loss."

• The November 2023 survey was conducted online between 20 October and 6 November 2023 and was completed by over 250 advisers.