Last year was one of the most challenging in decades. Inflation reached levels unseen since the 1980s, while interest rates reached their highest point in 14 years. While there’s been some bounce back from the initial effects, recovery is slow, and its legacies still linger.  

According to the Bank of England (BoE), Britain is set to enter a period of prolonged recession, affecting credit and job security, and leaving investors looking closely at inflation and interest rates.  

FT Advisor puts it more bluntly, saying: “many clients will be forced to scrutinise each and every outgoing – including their investments.”

So what will 2023 look like?

To explore what the coming year may have in store for IFAs and their clients, LinkedIn asked a number of financial experts for their predictions.

Many suggest we have seen inflation reach its peak, with some main indicators, such as gas prices, and food and shipping costs beginning to point in the right direction. At the time of writing, inflation stands at 10.7%, but several respondents believe it will drop to single figures during 2023 to somewhere around the 5-7% mark.

However, many also expect there is more to come from the BoE around interest rates as it aims to restore credibility to the UK economy. Currently standing at 3.5%, rises to 4.25% or even 4.7% are predicted during 2023. Though this is lower than some market expectations of 6%, this still represents a considerable concern for many, especially those people with expiring fixed-rate mortgages who have watched in horror as interest rates increased fivefold since Feb 2020.

FT Advisor also highlights other factors that advisers should have on their radar. The first is consumer duty. Though essentially an evolution of Treating Customers Fairly, regulators will look deeper into how financials run their business. As a result, advisors will need to look beyond fulfilling their compliance needs and run processes and decisions through the client’s lens.

Another is making sure IFAs’ are as cost-effective as possible to mitigate the increased cost of living and running their own business. For example, many are deciding to reduce or leave expensive office space or embrace hybrid ways of working.

Though these only indirectly impact clients, they are another example of the multiple plates IFAs need to keep spinning against a difficult backdrop.

How Flagstone helps advisers face 2023’s challenges

High-quality financial advice is likely to be in demand more than ever. But with some investors becoming increasingly nervous, advisers will have to work hard on four major fronts:

• To reassure clients that their wealth is protected.
• Investments are both still valuable and working as hard as possible.
• Clients receive value for money.
• The adviser role is trusted and benefits them.

A global study by Accenture revealed the “traditional line-up of industry players is changing”, fuelled by technological advances that are bringing FinTech and digital companies into the heart of the market with client satisfaction firmly at their forefront.  

To improve operational agility and the client experience, priorities suggested by the report included:

• Innovation in new investments and advice solutions.
• The use of hybrid advice models to tap into underserved markets
• Using the right mix of tech and platforms.

Flagstone is an award-winning FinTech and the UK’s leading cash deposit platform. Cash can often be overlooked in favour of ‘flashier’ investments. But in a volatile financial landscape, cash provides a ‘no-risk’, secure buffer that can be used as a safety net or an invaluable part of a broader savings portfolio.

With access to hundreds of savings accounts – including market-leading and exclusive rates – from up to 45+ banks, our platform gives you the ideal opportunity to start conversations about cash as a secure and different way of growing clients’ interest income.

Following a single application and through their own Flagstone account, your clients can manage and move their money, and see how their cash investments are performing 24/7.

As an IFA, you can view their entire savings portfolio, and receive updates about new products and rates. You also get alerts for any accounts about to mature, enabling you to start timely investment conversations and cement your role as trusted IFA.

Whatever ups and downs 2023 may have up its sleeve for us, joining our network of advisers ensures you are ready to meet them head-on. It also future-proofs your business by enabling you to access the latest technology and forward-thinking banks, placing you as the ideal partner for the digital banking world of the future.

To find out more about what Flagstone has to offer you and your clients, speak to a member of the team.