Adviser optimism abounds as firms position themselves for growth

Each year, we examine the opportunities and challenges facing advice businesses through our IFA DNA research programme, a survey¹ of 200 financial advisers from firms large and small. In particular, the study explores firms’ plans for the future and how practitioners see the advice market developing over the years ahead. 

After a downturn in optimism last year, which survey participants said was mainly due to the pressures associated with a challenging low growth or recessionary environment and an ever-growing burden of compliance and regulation on firms, there has been a remarkable turnaround in the outlook this year. In fact, firms are feeling more bullish about their prospects than at any time since the research began in 2020.  

Despite the political and economic uncertainty experienced over the past 12 months, 78% of respondents said their firms were looking to grow by taking on new clients over the next three to five years. This is by far the highest score recorded since the study began. Similarly, the scores for those planning to grow by increasing assets from existing clients (60%) and hiring new staff (47%) were also at all-time highs. 

Intentions for the future 

^{Source: Fidelity/NextWealth IFA DNA Report, October 2024} 

More individuals seeking advice than ever before 

This surge in optimism may be linked to the fact that many advice firms (29%) said they have taken on more new clients than usual over the past year. In fact, this is by far the highest percentage recorded since this question was first posed by the study in 2021. Responses suggest this is down to more individuals seeking advice due to worries about the change of government and ongoing market uncertainty. Indeed, feedback from the qualitative interviews suggested that firms were inundated with calls from anxious clients concerned about the change in government. 

The increasing demand for advice 

In addition to the positive figures for taking on new clients, practitioners are very confident about how the demand for advice may grow over the next five years. Almost three out of every four respondents (73%) said they expect demand to increase over the coming period – again, by far the highest figure we’ve seen since this research began. As one practitioner who participated in the survey said, “there’s going to be a generational change in attitude towards financial advice in the next five years. I think there are lots of surveys that say there is a massive under-serve in terms of there’s a big advice gap between those that have advice and those that don’t”. However, it should be noted that 16% of respondents said they expect demand to fall, another figure which is higher than for any previous year.

The demand for advice over the next five years 

^{Source: Fidelity/NextWealth IFA DNA Report, October 2024}

Advisers believe the demand for advice will primarily be driven by a greater awareness of financial planning. However, political change and market uncertainty were also frequently mentioned by participants. In addition, advisers believe the two tailwinds of decumulation and intergenerational wealth transfers will also drive the demand for advice. 

The advice sector has proven to be remarkably resilient over the five years of IFA DNA research conducted since 2020. It has had to contend with many pressures, such as the changes to working practices brought about by the COVID pandemic, ongoing market uncertainty and seemingly never-ending regulatory change. Despite these challenges, the advice sector appears to be in good shape and is looking ahead to the future with much optimism. 

For more on the IFA DNA research results, including how firms are adapting to regulatory and political change, download the full report.

Source :
¹ IFA DNA 2024: Research conducted by NextWealth in July 2024