Online self-service investment platforms are the big winners as regulators around the world tighten up the rules for giving financial advice.
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Britain is one of the financial markets where changing rules has had the biggest impact.
Since the Financial Conduct Authority introduced the retail distribution review in January 2013, the British financial advice market has changed dramatically, says Simon Willoughby, of AXA Wealth International.
He argues that the way customers shop for financial services and the products they are looking for have both changed.
“Doing away with commissions and paying for advice from an IFA has made the switch from face-to-face to digital shopping for financial services move at a faster pace,” he said.
“Customers want flexible products that they can control. The Budget changes for pensions have reinforced this move.”
Negative savings rate
The European Central Bank has introduced a negative interest rate of -0.01% for savers – and
Azad Zangana, European economist at Schroders, believes the decision was driven by estimates for inflation in the Eurozone.
“Eurozone inflation is down to 0.5% and this is encouraging people not to spend as prices are falling and the danger of deflation is on the horizon. Inflation has fallen 0.2% between April and May,” he said.
“The bank had to act to encourage people to spend now rather than wait and see if they can buy cheaper. The bank is under pressure to relax policy to help weaker than predicted GDP.”
Money shifts to emerging markets
IFAs are shifting client cash into emerging market funds and equities, according to Jeremy Roberts, head of UK retail sales at BlackRock.
The firm asked London IFAs about their plans for client money for the rest of this year, and three-quarters responded that expect to put more money into Asian stocks and shares and 60% plan to increase exposure to emerging market equities.
“The picture also showed that confident investors also have a taste for European equities,” said Roberts. “Just over half are optimistic about the markets and nearly two-thirds expect to put more investor cash into this market.”
Meanwhile, the survey also showed many investors are focussing on building cash pots to see them through their retirements. Almost three-quarters cited investing for retirement as their main focus, compared with less than a third building long-term wealth.
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