• SJP’s The Future of Financial Planning report combines views from consumers, advisers and industry subject matter experts on key challenges and opportunities both now and for the future
  • Report investigates importance of embracing and incorporating technology to deliver personalised advice and guidance - and context in which advisers might operate in future

St. James’s Place (SJP) today reveals new insights into the future of financial planning, as it looks to contribute to the agenda for the industry.

The report examines the factors that are important to advisers and consumers, as well as offering expert insight into wider sector developments that advisers must take into account in relation to taxation, pensions regulation, vulnerability, responsible investing and technology.

The Future of Financial Planning report1, underpinned by research and expert contributions, was led and curated by Technical Connection, in association with their research partners, Ad Lucem, for St. James's Place. It combines views from financial planners across the industry, consumers and subject matter experts and provides deep insight on the key components of the financial planning process that will influence and shape how it may look going forward.

Tony Wickenden, Managing Director at Technical Connection, says: “Nearly a decade on from the Retail Distribution Review, which aimed at transforming how financial advice was delivered and paid for, there are many key influencing factors to take into account when we look to the future of financial planning. These include, but are by no means restricted to, technology, regulation, consumer demand and expectations, together with adviser capacity and competence. Add to this economic, tax and pensions policy, client vulnerability and the ever-onward march of technology and you have a heady cocktail of opportunities and threats to be navigated.

“With SJP as a leading UK wealth management business and Technical Connection with its specialist lens, we want to help contribute to this important debate. In order to meaningfully do so, it’s essential to be constantly aware of what consumers, advisers and subject matter specialists think so that our thinking is truly informed.”

 

Key findings from the Future of Financial Planning report

Younger client demographic is underserved

The research finds that advisers are not sufficiently broadening their service to the younger demographic, with just 20% of the average adviser’s clients aged under 45. Most are aged 46 to 60 (44%), with a third (33%) over 60.

When it comes to prospecting for new clients, almost two-thirds (63%) are targeting those aged 51 to 65, with over half (56%) looking at 66 to 75 year olds. Only a quarter (25%) are prospecting under 35s. The younger demographic is therefore underserved, but this presents an opportunity for advisers in future to expand their client base.

Need to attract next generation of advisers

Worryingly, within 10 to 20 years, most current advisers expect to have left the industry. Three in five (60%) advisers do not expect to be actively advising clients in 20 years’ time, while 35% do not envisage being in the industry for the next decade. There is therefore a need to attract more advisers to serve the future client base.

Interestingly, the majority (87%) of advisers that do not expect to be working in the next 20 years do not have a formal plan in place to exit the financial planning sector.

Personalisation should be a priority

The research also highlights the importance of a personalised service and ensuring clients are regularly listened to, especially as the industry looks to attract the next generations of clients. Three in five (60%) clients say they would like to see changes to the service they receive from their adviser, with this rising to 73% among 35 to 45 years olds, and 90% among under 35s. However, only a quarter (26%) of clients have been asked by an adviser about what they value about their service and how it’s delivered. and what If anything they would like to change.

Working in tandem with tech

Embracing technology is paramount to the future of financial planning. More than four in five (81%) clients expect technology will, or is likely to, pose a threat to traditional financial advice methods in the future, meaning it must be appropriately adopted and adapted by advisers to survive and progress.

Positively, advisers do see an opportunity for technology to add value to their proposition, identifying the following areas as those that would benefit most:

  • Cash flow planning (75%)
  • Client reporting (73%)
  • Client reviews (72%)
  • Portfolio tracking / re balancing (72%)
  • Risk attitude (65%)

Tony Wickenden continues: “Understanding what’s most important to the client, and keeping that at the forefront of the advice proposition, will ultimately lead to the greatest benefits for clients and the financial planning businesses supporting them. On top of this, understanding best practice; deploying workable strategies; and delivering the best possible version of informed client care through a combination of financial planning expertise, technology and wider appreciation of the economic and regulatory drivers, is a powerful mix. It’s one that sustainable, successful businesses have always employed and will continue to need to embrace going forward. Combining knowledge of what’s possible and what’s important to the client is what will deliver all important Advice Alpha. Namely the positive difference made to the client’s financial wellbeing by engagement of the financial planner.

"The future shape and delivery of financial planning strategy will be influenced by many factors, including the inexorable advances in technology in financial planning. It’s so important to respond to the needs and expectations of clients, especially younger clients and to enhance delivery efficiency. There is also the continuing uncertainty in relation to the future of taxation and pensions and the impact of developing regulatory change, especially consumer protection and the required commitment to consumer duty. In addition, the growing importance of paying proper attention to the many potential vulnerabilities of clients and the impact of financial decisions on climate and global wellbeing means that the profession has to seek a greater understanding of, and insight into, these powerful and important influences in designing financial plans that are appropriate for each client. One size absolutely never has and never will fit all, and efficient, appropriate Integration of technology Into the financial planning process Is likely to be absolutely essential.”

SJP’s Future of Financial Planning report can be found in full here.

1 - Research conducted by Ad Lucem in February 2022 among consumers and advisers from across the industry. 1,000 advised clients with a minimum of £50,000 investable assets were surveyed, 200 advisers interviewed by telephone, and 200 unique advisory firms interviewed. The research was geographically representative.