Financial advisers in the UK are only now facing the full impact of the global credit crunch – almost one year on – so will they survive or thrive as the wider British economy retracts?

For planners, as with many others in the UK, a major concern is that the impact of the credit crunch has not hit home yet, but is about to.

Everywhere there are signs that the wider economy is now feeling the effects of higher inflation, higher prices for oil and food, reduced consumer spending and a general loss of confidence following the well-publicised woes of the banking and finance sector.

The Confederation of British Industry (CBI) is now revising its opinions on the economic outlook, saying the position is now markedly worse than two or three months ago.

Certainly, the housing market is now in its worst slow-down since the early nineties, with estate agents now selling an average of five properties a month, as property prices have slumped and mortgages have got far harder to arrange.

CoreData does a lot of work researching the UK wrap market and one adviser recently expressed the view that a market downturn could mean advisers are less likely to adopt new platforms, as they become more cautious. Is this likely to happen?

There appears to be a steady move towards wraps in the UK and it is hard to see how rocky investment markets, or a slowing economy could derail this.

One prediction is that a recession in the UK, which many now expect, could accelerate existing trends.

Financial advisers that concentrate on transactions, rather than ongoing advice, could struggle.

Initial commissions are already under pressure and a recession could cut discretionary spending on new financial products, whereas advisers that provide an ongoing service may find that their clients value their services more in a downturn.

If this is the case, wraps as a tool for ongoing advice, could continue to make inroads.

Advisers may also find it prudent to make sure areas such as protection and insurance are part of their services.

With investment markets, particularly equities, looking volatile, advisers that focus on providing both general and specific stock related investment advice could suffer, if their recommendations fail to perform.

One possible concern here is many forms of insurance are now commodity product, with online financial supermarkets competing to offer the most attractive deal.

At present, the personal finance sector and financial advisers are holding up well despite the gloomy picture.

However, if the economy moves into the red, this could change – the problem is, no-one really knows what is around the corner.

The UK could be in for a relatively mild, technical recession, or it could be something worse.

For financial advisers, as for many others in the UK, 2009 could be a very tough year indeed.