Nearly half of financial advisers (45%) are considering launching new cut-down advice services using the proposed FCA advice / guidance boundary changes, according to a new survey.

The business plans come as advisers report clients are showing their greatest optimism in investment markets since 2021.

The finding are included in the latest 2024 Schroders UK Financial Adviser Pulse Survey.

The survey of nearly 300 advisers in May found that many were planning new propositions if the FCA opens the door to cut-down advice or guidance propositions. Some 45% of advisers stated they were considering a new proposition for some of their clients or new clients.

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The FCA is reviewing the strict advice/guidance boundary to help fill the advice gap. The moves, outlined in in FCA discussion paper DP23/5, could be mean a new range of limited guidance financial products and services which would not need ‘full fat’ advice.

The FCA is currently sifting through feedback to its proposals.

The Schroders survey also looking in detail at client confidence. Schroders, which has a substantial Financial Planning arm in partnership with Lloyds Bank, says its survey suggests more clients are looking to “embrace risk” by returning to invest in the markets.

The survey found that 49% of advisers reported that their clients, who have been holding cash over the past few years, are now more likely to consider returning to investment markets or have already invested. 

The survey also found that 41% of advisers have reported that their clients were now “bullish” compared with only 17% in November 2023.

The survey revealed that clients continue to report capital loss as their key concern, although this has dropped from a peak of 63% in November 2022 to 47%. 

Advisers also expect markets to improve further over the next five years with 69% of advisers expecting higher global growth (an increase from 53% in November 2023). This proportion stood at 30% in May 2022.

With the UK General Election on the horizon, the survey, carried out between 25 April and 8 May across a sample of 276 advisers – found that almost three-quarters of advisers (74%) reported that clients were asking about what impact a potential change in UK Government will have on their finances.

The survey also found that 26% of advisers reported a decrease in clients seeking sustainable investment solutions. The survey found a changing client appetite for sustainable investment solutions as a result of perceived performance challenges (61% v 49% in May 2023), followed by increased scepticism (74% v 37% in May 2023). 

Advisers are becoming more relaxed with the Consumer Duty requirements and are focused on implementing it. The number of advisers saying that the Duty will have a significant impact has fallen slightly recently from 41% to 39%. The ongoing assessment of fair value using client feedback remains the key priority in 2024 for advisers.

In other key findings:

• Retirement Income Review: 67% of advisers have reviewed their retirement income proposition as a result of the FCA thematic review of Retirement Income Advice. The key areas they are focusing on are the ongoing service proposition, assessing capacity for loss and the investment proposition (in that order).

• Advice/Guidance Boundary: 45% of advisers are considering a new proposition for some of their clients or new clients.

• Lifetime Allowance changes: 92% of advisers have some clients who have been affected by the changes to the Lifetime Allowance.

• British ISA: 80% of advisers said that they would consider recommending the British ISA if introduced. 

• Artificial Intelligence: More than half (57%) of advisers anticipate higher disruption related to technological advances, an increase from only 30% in November 2022.

James Rainbow, head of UK at Schroders, said: "I am delighted to see evidence that clients are growing increasingly confident after a challenging few years.

“This positive trend reflects what we are seeing, both at a macro level as inflation falls and economic growth returns, but also across our industry."

• For its May 2024 Adviser Pulse Survey, Schroders conducted a survey of 276 advisers online between 25 April and 8 May.