The first study has found that eight out of 10 advice professionals would recommend financial planning as a career, underlining the strength of positivity among the advice community in the future of the industry. Client enquiries increased in the pandemic and 56% of advisers expect to grow their business in the next five years.  Technology has improved the ability of advisers to serve clients and three quarters expect to look after clients on a hybrid basis, combining remote and face-to-face advice delivery. Sustainability is looked on favourably and is seen as a great opportunity to engage with clients. 

Ben Goss, CEO of Dynamic Planner said: “Being at the heart of one of the largest advice communities gives us a unique insight into what is driving the future of financial planning and advice in the UK today. The aim of the Dynamic Planner Spotlight Report is to investigate and share this insight, and in doing so play our part in what we believe is the biggest transformation of the industry in a generation.” 

The Dynamic Planner Spotlight Report is based on research amongst the users of Dynamic Planner, one of the largest advice communities in the UK.  The report will be published on an annual basis, shining a light on the burning issues of the moment. 

Key findings reveal:  

• Eight out of ten individuals working for financial advice firms would recommend financial planning as a career, demonstrating the industry’s overall confidence in the future. Women are especially positive, with 88% of respondents recommending financial planning as a career; 
   
• Over the last three years, and against the backdrop of the pandemic, 1 in 2 (50%) advice firms increased adviser numbers. Over a third (38%) of firms saw new client enquiries increase during the past 18 months as individuals took stock of their finances; 
   
• Close to half expected to increase client numbers over the next three years, and one in seven expects to increase numbers significantly. The next generation of advisers has great confidence in their ability to grow their client base – a consensus among all advisers under 30; 
   
• The majority of advisers are looking to grow their businesses over the next five years.  Mid-sized firms with between 6 and 49 advisers are the most likely to be actively seeking growth.  Most expect to expand their businesses organically, by growing client assets and increasing headcount within their firm. Around one in ten firms are looking to acquire other businesses; 
   
• Around 8% of advisers are looking to sell their business and/or exit the industry within the next five years. For Sole Traders specifically, this number increases to 23%, perhaps reflecting the wider consolidation activity in the market and the current high valuations for advice firms; 
• With percentage of investment remaining the dominant form of adviser charging for most firms, serving existing clients remains a profitable activity. At the same time, while many firms have looked to increase adviser headcount in recent years, this is an industry that feels constrained by an ability to serve an increased number of clients;  
   
• Time spent on back-office activities has increased and many advisers are ‘time poor’. This is cited as the main reason why advisers are unable to offer services to consumers who they do not take on as clients; 
   
• Half of all respondents state that the burden, cost and pressure of regulation is currently a significant challenge for their business. The number increases to 62% for Sole Traders, but the challenge is constantly mentioned by firms of all sizes; 
• Outsourcing investment management, either by using multi asset/multi manager funds or via a Discretionary Fund Manager, are the two most popular investment strategies within advice firms, and over a quarter of firms expect to do this even more in the future:  Only one in five firms report that they are now building their own portfolios; 
   
• Nearly three quarters of firms expect to adopt a hybrid advice model, mixing remote and face-to-face advice where appropriate, whereas only one fifth of advisers expect to return completely to face-to-face advice; 
• There is a strong degree of positivity amongst advisers about sustainable investing. Over half of respondents believe that sustainability offers a great opportunity to engage with their clients, and 55% feel they already have the tools and materials necessary to make an informed choice for their clients around sustainability; 
   
• Use of financial planning software and systems is widespread amongst all advice firms, and technology appears to be working for advisers – nearly nine in ten believe that technology is improving their ability to serve clients.  

Ben Goss, CEO at Dynamic Planner said: “The advice industry has always been characterised by two main attributes – resilience and adaptability.  These characteristics have recently been tested like never before, and we wanted to understand the challenges advisers are currently facing and the level of confidence in their plans for the years ahead.    

“What we found is that advisers are facing into the future with confidence, with the majority happy enough to recommend it as a career choice. Many, particularly younger advice professionals, are confident that client numbers will increase in the years ahead, with the tailwind of the pandemic continuing to drive consumers towards financial advice. Of course events of the past 18 months have accelerated the use of technology to enable remote delivery of advice, and most advice firms expect to continue with some form of hybrid working. 

“When it comes to sustainability the signs are clear from our report that advisers – and the clients they serve – expect sustainability to be at the heart of their investment decisions. It is an obvious opportunity for advice firms, and the wider financial services industry, to really seize in the years ahead. 

“However, significant challenges remain. Time spent on regulation and back-office activities has increased in recent years, often to the detriment of time spent with clients. Reducing the time and cost to serve clients, whilst maintaining high levels of engagement and demonstrating value, is a big issue for advice firms of all sizes. Technology is undoubtedly the key to unlocking this potential, with the majority of advisers saying it is improving their ability to serve clients.”