Trusted Advisor

A report on the future of UK trust and estate practice by the Society of Trust and Estate Practitioners.

Download full report in PDF format (1.93MB)

Introduction

The landscape for STEP members in the United Kingdom is changing fast. New regulations, new competition, new business practices are all combining to offer up new challenges. As one STEP member put it to us: 'We're going to be taken in to a completely different sphere of how we do our work'.

In a seminar held in London in January 2010 we invited 36 STEP members from around the country to share their views on what the future held for their businesses.

Several themes emerged from this seminar, designed and moderated by Magnus Spence of Spence Johnson. However, it was quite possible, as some members pointed out, that the predictions discussed in this session were not representative of the views of the wider STEP membership in the UK. As a result, in May 2010, STEP conducted quantitative research using the summary of the findings of the January seminar. 284 respondents from across the UK participated in this survey and were asked to express their degree of agreement with each prediction ranging from 'strongly agree' to 'strongly disagree'.

This paper draws conclusions by bringing together qualitative opinions from the January seminar and the quantitative results of the May survey.

The results in this report are grouped into three specific areas of change:

• Regulation
• Clients' needs
• Business models and strategy

What emerges most clearly across these predictions is that our members in the UK expect huge changes in coming years. The growing role of the internet, the tendency towards multi-disciplinary structures and the commoditisation of services are examples of this. And yet the mood in the room on the day of the seminar was not of anxiety but of anticipation. As one STEP member said: 'I don't regard change as threatening and don't regard it as something that need be seen as a problem.'

One of our tasks at STEP is continually to listen to the views of our members. We hope that this document, the creation of which has certainly helped us in this objective, also helps you in casting light on how the future might impact your business. For STEP, these findings will help the Society develop the most effective support for members that it can to ensure that change means not threat, but opportunity.

Conclusions

10 key predictions: agreed by over 50% of respondents

Regulation

Regulation will increase across the board. Although, on a positive note, STEP members consider themselves to be better placed than non-members to deal with increased regulation. A majority of respondents thought that the prospective regulation of non-lawyer will writers would be advantageous to their firm, but that the impact of increased regulation on costs will make it disproportionately harder for smaller firms to compete financially. Regulation is not predicted by our members used in a variety of estate-planning services.

Clients' needs

Members are reporting a rise in people requiring specialist advice due to increasingly complex family relationships including a rise in the number of cross-border estates. The ever-expanding availability of information through the internet is also having an impact on clients' needs in the trust and estates market. This information is leading to clients making more specific demands of practitioners and demanding higher value-added services. The increasing availability of information through the internet will also result in downward pressure on pricing.

Business models and strategy

In England and Wales the legislative framework enabling alternative business structures [ABSs] came into being with the passing of the Legal Services Act 2007. Although, it is rumoured that Jonathan Djanogly, the new man at the Ministry of Justice with responsibility for implementing the Legal Services Act 2007, is not enthusiastic about the philosophy behind ABSs and external investment. In Scotland, the Legal Services [Scotland] Bill is likely to have passed and introduced ABSs by the end of 2010.

STEP members' attitudes to alternative business structures [ABSs] are determined by whether they see them as a threat or an opportunity. As a result the survey questions around ABSs resulted in less clear predictions.

There was a slim majority for those who thought ABSs will create more awareness and hence more custom for private client practitioners across the price spectrum. However, it was strongly felt that ABSs will revolutionise the way services are delivered and that a collision of differing cultures and regulatory regimes will provide challenges.

Members did think that the market will polarise between those competing on price and those offering bespoke services and that clients will be more ready than they have been historically to move from one service provider to another. They also thought that fewer TEPs would offer will drafting services as a loss-leader. There was less certainty as to where the growth in the market would come from, with almost equal numbers agreeing and disagreeing with the proposition that the biggest growth in the market will occur in the areas in which practitioners compete on price.

Members thought the demand for the multi-disciplinary approach will result in the increased use of outsourcing by firms and that those adopting the multi-disciplinary approach will see increases in efficiency as a result.

It was agreed that services in the middle end of the market will be dominated by a commoditised approach, but members were unsure as to whether increasing commoditisation would lead to growth in the private client market as a whole.

Finally, members agreed that the industry was moving towards the 'One Trusted Advisor' model where the advisor knows their client, and knows a network of specialists that they can manage to handle all areas of estate administration.

For further analysis, download the full report in PDF format (1.93MB)