IFA DNA study reveals record growth ambitions among advisers, with positive outlook for AI’s role in the industry - Fidelity Adviser Solutions

• Fidelity Adviser Solutions, Fidelity International’s adviser platform, has published the fifth instalment of its IFA DNA study
• 78% of advice firms plan to grow by acquiring new clients over the next three to five years, the highest figure since the study began in 2020
• AI is seen as a positive force, with 68% of advisers believing it will help them save time and work more with clients
• Top challenges include increased compliance burdens (named by 37% of advisers) and managing a business in uncertain times (36%)

Advisers are more optimistic about growth than ever before, according to findings from Fidelity Adviser Solutions’ latest IFA DNA¹ study.

The study, commissioned in conjunction with NextWealth, is an annual examination of the opportunities and challenges facing advice businesses. Last year’s results did not make for pretty reading, with advisers having to adapt to ongoing uncertainty – a challenging low growth and recessionary environment where clients are adjusting to higher interest rates and a cost-of-living crisis. This year’s results strike a more resilient and optimistic tone.

Advisers are embracing change with confidence, as 78% of advisers plan to grow their business by taking on new clients over the next three to five years. This marks the highest level of growth ambition since the study began in 2020.

In addition to seeking new clients, 60% of firms plan to expand by increasing assets from existing clients, while 47% intend to grow by hiring new staff. Notably, 29% of advice firms have taken on more clients than usual over the past year - another record since this question was first posed in 2021.

The demand for financial advice continues to rise, with almost three out of four (73%) advisers expecting an increase in client demand, up from just 51% last year. Factors driving this demand include heightened awareness of financial planning (60%), market and political uncertainty (41%), and the increasing complexity of personal finance (40%).

The growing demand for advice over the next five years

Advisers and planners overwhelmingly believe that Artificial Intelligence (AI) will positively impact their role (68%) believing it will allow them to focus more on the human aspect of delivering advice. Indeed, over half (53%) of respondents see AI as a way to save time and support a larger number of clients, 50% believe it will help them spend more time on client-facing tasks, while 38% say it will allow them to work more effectively, particularly with clients with lower levels of assets.

However, challenges remain, with more than a third (37%) of firms highlighting the increasing burden of compliance, while 36% are concerned about managing their business in uncertain times. The cost of meeting compliance requirements, such as professional liability insurance and regulatory levies, also continues to weigh on firms (36%).

Paul Richards, Head of Distribution for Fidelity Adviser Solutions comments: “These findings underscore the resilience and optimism within the advice industry, especially in the face of the political and economic uncertainty we’ve experienced over the past 12 months. Despite challenges with inflation, volatile markets and shifts in the political landscape, advisers remain bullish about the future with many firms planning to grow by acquiring new clients over the next three to five years.

“These macroeconomic challenges have underlined the importance of financial advice, with market and political instability and the rising cost of living driving demand for support amongst clients. Advisers play an integral role in their clients’ financial lives.

“Not only are firms actively planning for growth as demand increases, but they’re also embracing technological advancements like AI to better serve their clients and streamline operations.

“However, the industry isn’t without its challenges. Regulatory and compliance factors are consistently ranked as some of the more difficult areas for advisers to navigate - and have done so since we first asked this question in 2022. Even so, this year’s research results reflect an industry well-positioned for growth, demonstrating resilience and adaptability in uncertain times.”

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¹ Research commissioned through NextWealth, findings based on a representative sample of financial advisers from research conducted in July 2024.