Page 4 - peterevans Newsletter Q2 1014

The investment landscape in 2014

There have been at least two welcome pieces of news

in 2014 in the UK investment landscape; a reported
growth in the number of investment advisers (albeit

non-aligned with banks) and an increased allowance

for investment in Individual Savings Accounts
(ISAs).

Concerns over the impact of the Retail Distribution

Review (RDR) had been voiced by the Treasury Select
Committee, when it interviewed Martin Wheatley, the

chief executive of UK market regulator the Financial

Conduct Authority (FCA), in February. A fall in the
number of investment advisers had been reported,

triggered by banks who were no longer able to make the

economics work by providing advice based on a fee
structure rather than commission.

The FCA had found that – excluding bank advisers – the
total number had increased from just over 20,000 to

nearly 22,000 from December 2013 to January 2014.

As Wheatley noted, “[Banks] failed but other people
are finding a way to do it.”

On top of this growth, the announcement that ISAs will
now have a £15,000 limit from July 2014, matched with

the continuing low interest rates may well see more

savers choosing to invest in securities. This could
provide a welcome flood of income for brokers and

investment firms targeting individual investors.

As stock broker Hargreaves Landsdown noted in its

interim report on 16 April 2014 “The changes announced

represent a sea change in opportunity, with exceptional
reform of pensions, a higher ISA limit and more

simplicity... We may now find that there is more

enthusiasm about retail investing, something [we have]

long campaigned for”.

Some brokers, have invested in the development of a

value-added service offering, in the form of validated
peer-to-peer information sharing. Many investment sites

carry message boards, but without any validation of the

other participants, investors have no way of knowing the
value of information being shared. The inclusion of a trust

measurement between investors could allow a significant

uptake in the usefulness of these peer-to-peer tools,
filling a gap where professional advice is still lacking.

Alternatively, partnering with independent financial
advisers could allow execution-only brokers to channel

the increased trading volumes that are likely to result

from George Osborne’s generosity. Either way,

opportunity knocks.