Good morning and welcome to your Morning Briefing for Tuesday 22 October 2024. To get this in your inbox every morning click here.
FCA interviews 20 finfluencers under caution for touting financial products
The Financial Conduct Authority (FCA) has interviewed 20 finfluencers under caution for touting financial services products illegally.
It said the individuals were interviewed voluntarily using the FCA’s criminal powers. The regulator has not yet named the individuals under investigation.
The FCA also announced that it has issued 38 alerts against social-media accounts operated by finfluencers that may contain unlawful promotions.
‘Unprecedented shift’ in fee models used by financial advice firms
There has been an “unprecedented shift” in the variety of fee models used by financial advice firms, a new report from NextWealth suggests.
Percentage of assets remains the most common charging structure, used by 71% of respondents’ firms.
The study shows that while this charging model continues to dominate, its use is in decline – with popularity of all other charging structures rising.
In Focus: Vulnerability is more than just a tick-box exercise
“It’s easy, when one hears the word ‘vulnerability’, to say, ‘That’s not me,’” points out chief reporter Lois Vallely.
“My dad has asthma, Type 2 diabetes and high blood pressure, but he still insisted he should take his turn to make a trip to the supermarket during the Covid-19 lockdowns.
“This is just one of many issues advisers face when identifying vulnerability in their client base.”
Quote Of The Day
No government at all serious about growth would hike CGT on entrepreneurs selling a small business
– Tina McKenzie, Policy and Advocacy Chair at the Federation of Small Businesses, sends out a warning ahead of the 30 October Budget
Stat Attack
To mark Scams Awareness Week (21-27 October), Wealth at Work have provided insights into the true level of financial scamming across the UK.
Despite 72% of UK adults saying they are confident in their ability to identify a financial scam, the results showed:
12%
of UK adults have admitted to losing money to a financial scam in the last year.
40%
find it difficult to trust that any financial information is legitimate.
27%
say it has had a negative impact on their mental health.
24%
do not feel safe investing their money.
22%
have had to change their future plans due to losing money in a scam.
34%
of those who had lost money in the last year had done so to two or more types of scam.
£1,000
The average amount of money lost to a scam.
Source: Wealth at Work
In Other News
A recent analysis of Origo’s pension-transfer data reveals that a growing number of policyholders are shopping around for the best annuity deals, moving away from their original providers.
According to Origo, while 45% of annuity buyers are sticking with their existing pension provider, 55% are switching to new providers to secure better terms.
The Financial Conduct Authority (FCA) recently reported a 38.7% rise in annuity purchases between the 2022/23 and 2023/24 tax years.
This increase reflects a shift in consumer behaviour, with more people exploring the wider market to maximise their retirement income.
Anthony Rafferty, CEO of Origo, noted: “It’s encouraging to see more pension holders exercising their option to switch providers for better annuity rates. Securing the best deal is essential, as annuity purchases are irreversible.”
Origo also launched the Annuity Transfer Tracker, a tool that provides real-time updates on annuity transfers between pension and annuity providers.
This tool allows advice firms to monitor the progress of their clients’ transfers, improving service and reducing the need for follow-up calls.
Rafferty believes this tool will enhance the efficiency of the pension-to-annuity transfer process and ensure clients get the best possible retirement outcome.
UK borrowing tops official forecasts again as Reeves readies budget (Reuters)
Interest rates to fall to 2.75% by next autumn, Goldman Sachs predicts (The Guardian)
Employment reforms to cost firms up to £4.5bn a year (Bloomberg)
Did You See?
Employee engagement in the UK has hit a concerning 10-year low, with only 10% of employees feeling engaged, compared to the global average of 23%, according to workplace consultants Gallup.
This is particularly alarming for the UK financial services sector, which faces significant challenges as generational shifts approach.
By 2025, Gen Z will make up a quarter of the workforce, while one-third of financial advisers are expected to retire within the next three years.
To navigate this transition, firms must improve their employee engagement and management practices to attract and retain the next generation of advisers.
Read the full story by Simon Evans, director at Clearcut Consulting – Engage First.
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