L&G report shows advisers are less confident about business as a whole
Advisers feel relatively more confident about protection than about business overall, according to Legal & General.
The provider's Adviser Confidence Index for Q3 2008 showed 45% of advisers expect business to get worse over the next quarter, an increase on 33% in Q2 and 16% in Q1. However, 38% of IFAs, according to the report, predict the protection market to remain steady. Optimists were out in force with 39% expecting protection sales to rise compared with 23% anticipating declines.
Regarding the gloomy feelings about business as a whole, the report said that adviser confidence has reversed from the first quarter of the year as many more advisers were pessimistic about business prospects. This attitude, according to the advisers, had worsened throughout the year. They did say, however, that predictions of flat sales growth had remained broadly in line with predictions made in Q2.
Stephen Smith, director of housing at the provider, summed up the situation in the report as: "Mortgage advisers are clearly getting more pessimistic in general as the year goes on. However, there are some positives to be found in the protection market, in which 77% of advisers expect to see improvements or at least a flat market towards the end of 2008. So it's not all doom and gloom."
Discussing the signs of optimism among advisers regarding the protection market, the report said: "Confidence in protection sales is only marginally down since Q2, suggesting that protection could be a source of valuable income for the rest of the year."
Andrew Strange, policy director at Aifa, told COVER that IFA firms were still doing well, despite the repercussions of the credit crunch, because of an underlying demand among the general public for quality advice on investments, pensions and protection.
The survey also showed that 58% of advisers believe interest rates will be held at 5% by the Monetary Policy Commission, a big change from the 51% who predicted a cut of 0.25% in June which did not materialise.
Andy Couchman, co-editor of the Protection Review, made the case that the outlook was mixed: "Part of the reason is the attention is on these products when times get difficult and a lot of intermediaries are seeing their traditional lines having tough times. The adviser community has proved in adverse situations that it can dust itself down and get on with the job. That's where protection business looks positive. It's mixed because you would expect, with less mortgage-related business, there to be less business."
