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Axa Wealth’s Kellard warns on UK growth optimism

Advisers should not be overly buoyed by recent signs of improvements in the UK economy, Axa Wealth chief executive Mike Kellard has warned.

Speaking at the IFP Conference at the Celtic Manor in Wales today, Kellard said advisers should continue to be wary of the fragile economic situation in Europe and the knock-on effect this could have on the UK. 

He said: “You can’t afford to rely on the upturn in the UK market at the moment. The debate in Europe really still hasn’t reached a level which is intellectual enough.”

In September, growth in the UK was confirmed at 0.7 per cent for the second quarter with economists predicting further growth for the rest of the year. 

Kellard also cautioned over possible demographic dilemmas facing European countries. He cited difficulties replacing the current working age population and the increasing number of citizens aged over 65 as hurdles to economic growth in Europe.

He said: “Just to replace the working population in Europe we need a birth-rate around 2.1 children for every woman. Currently it is at 1.59.”

Advisers should also be positioning portfolios to take advantage of continued growth in Asia, said Kellard.

“Asian funds will start to dominate and for an asset manager or an adviser in the future, understanding Asia, its businesses and its culture will be key,” he said. 

Kellard warned the industry must act to close the advice gap post-RDR but admitted he doesn’t yet have a vision of what the solution would look like. 

He said: “This is an issue for society. Something has to happen because the unforeseen consequence of the RDR is that less people have advice. Something has to change but I don’t know what it will be.”

Axa closed its bancassurance division in April following a strategic review of the business. It claimed it would have had to charge a 6 per cent advice fee in order to deliver advice profitably, given current regulatory restraints. Last month, Axa was fined £1.8m by the FCA for failing to ensure it gave suitable investment advice to its customers.

Click here for all the latest news and views from the IFP Conference in Wales 

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