A recent study carried out by Intelligent Partnership has shown that more needs to be done by the alternative finance (AltFi) sector in order to reach a larger number of financial advisers.
The study indicated that 73 percent of AltFi service providers were either already promoting their services to financial advisers or had plans to start the promotion in the near future. Nonetheless, the majority of financial advisers are unacquainted with the latest developments in the AltFi industry. Despite providing corporations with staff advising services on a projected £590 industry, 27 percent of the AltFi companies did not have any plan of engaging financial advisers in their business operations, which might be the reason why advisers are, inadvertently, being kept in the dark.
Out of all the financial advisers that were involved in the study, only 7 percent were aware that AltFi is regulated by Financial Conduct Authority (FCA). In addition, only 13 percent knew that some AltFi companies were using contingency funds as a way of protecting investors against losses.
Some major barriers that prevented financial advisers from investing in the industry were insufficient data and knowledge
Guy Tolhurst, Intelligent Partnership’s managing director, said that some major barriers that prevented financial advisers from investing in the industry were insufficient data and knowledge. Therefore, there is a great need for the industry to get the word out to the adviser community so they can be better informed and more involved.
The number of retail investors opting for AltFi services is also expected to increase rapidly next year
Mainstream investors are expected to opt for AltFi once the new Innovative Finance Individual Savings Account (ISA) gets launched in April 2016. Estimations from the Centre for Economic and Business Research show that AltFi may be a £12.3 billion sector annually by 2020. Also, the number of retail investors opting for AltFi services is also expected to increase rapidly next year. This is because it will be more beneficial for investors to keep their investments in an ISA. And so, financial advisers will find their clients asking more and more about AltFi, and how it can benefit them.