Advice firms need to get creative to attract next generation of customers – AKG report

by | Nov 23, 2022

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Advisers are focused on the need to change their business models if they are to attract the next generation of clients, a new industry research paper from independent consultants AKG shows.

Its research found 91% of advisers recognise the need to develop different types of service and fee models in order to work with different client age groups and segments while also making use of new technology, the paper ‘NextGen or LostGen? – The need to develop new client acquisition strategies’, says.

Around half (50%) of advisers identified the cost-of-living crisis as the biggest barrier to change but 49% pointed to the impact of cost margins on their firm while regulation (47%), developing new service/fee models to accommodate new clients (47%) and the length of time needed to make new clients profitable (41%) also seen as key issues relating to new client acquisition.

Beyond the norm of targeting men with families and females with families, client sectors seen as important for new business include business owners, specialist sectors such as doctors or the armed forces, young families and the spouses or partners of existing clients.


The paper, designed to prompt debate and discussion on this key conundrum for financial services over the next five to ten years, is sponsored by Fluido and Schroders and available to download from the AKG website ( 

Matt Ward, Communications Director at AKG, said:

“Although some firms may be comfortable with their focus on servicing existing clients, over the longer term those aware of the requirement to future-proof their client base and the value of their business will recognise the need to develop new client acquisition strategies. This will not necessarily be easy, and the situation is exacerbated currently by client wherewithal in the cost-of-living crisis and the perceived cost and regulatory issues facing advice firms.


Whilst expanding footprint via relationship development with wider family units will play a key role, firms will need to get creative with their targeting, acquisition, and servicing strategies for the next generation of clients. This will inevitably require digital/technological support to create cost and process efficiencies but will also need a deeper understanding of future client requirements.”

Highlights of the comprehensive study, with findings drawn from three separate but complementary market research exercises (with adviser and consumer samples) include.

Recognition of the fact that things need to change. 16% feel they will need to develop digital servicing capability/functionality, 35% will need to add a more transactional (upfront rather than ongoing) service/fee model, 14% will need to add a charging model to attract families (such as offering some free services to next generation clients), and 26% will need to develop both digital servicing and new charging models.


Requirement to create cost efficiencies. Seeking to identify which types of technology partner/solution can help to create the required client servicing cost efficiencies within firms, those advisers surveyed by AKG saw roles for client relationship management systems (51%), back-office system providers (46%), open banking/finance apps (44%) and client portal/servicing apps (42%), and to some extent, platform operators (32%).

Duncan Muir, Global Industry Lead – Financial Services at Fluido, commented:

The opportunity to adopt modern and innovative technology is here today, however, many aren’t aware or don’t have the roles in their business to define a route forward. There is too much reliance on providers developing new capabilities however there are too many conflicting demands on their table.


Utilising technology to pick up the routine tasks and support front end elements of the advice process can reduce the cost to serve, manual intervention and enhance the experience of both user and client. All of these capabilities are accessible now and create the opportunity to increase capacity, reduce operating costs whilst not diminishing the invaluable services offered by advisers and meet the future expectations of clients in how they interact with their finances.

Consumers understandably pre-occupied with cost-of-living impact. Unsurprisingly, consumers are clearly concerned by the impact of inflation/cost-of-living (41%) on their lifestyle and finances, and 23% of those consumers surveyed were concerned about their finances/money matters in general. Matters relating to an inability to save adequately also featured among key consumer concerns, for example one-fifth (20%) of those surveyed were concerned about not having a ‘rainy-day’ savings fund to rely on. 17% felt they are not saving enough for their retirement.

A chance for the industry to help. The paper acknowledges that any interaction with the financial services industry will likely be impacted by these matters for the foreseeable, pointing out that this will create both challenge and opportunity for advisers and providers across the industry, but should be acknowledged as representing a fantastic chance to reassure, be helpful and show value.


Likely savings purpose. Despite current challenges, consumers evidently do recognise and are concerned about the need to save. Seeking to ascertain that if they are, or were to be, in a position to save money on a regular basis, which areas they would prioritise, the top purpose and priority selected was to generate a ‘rainy day’ fund to cover emergency costs/bills. On a similar theme, a number selected reserves to support their spouse/partner and family members. Reassuringly, from a pensions perspective, and despite short-term affordability pressures, some selected (saving for) a pension for their retirement.

Propensity for ‘lower risk’ products. It was useful to get a sense of what type of financial services product consumers would put money, if they are, or were to be, in a position to save/invest money on a regular basis. Obvious interest displayed in High interest savings account, Cash ISA, and Bank/building society deposit account. With an interest for some in Premium Bonds as well, a pattern through the survey findings for an appetite for those products deemed easier to understand and more conservative in their risk/return profile. Some of this may be related to access (to money) requirements, but it does beg the question of whether such vehicles can help customers keep pace with inflation.

Gillian Hepburn, Head of UK Intermediary Solutions, Schroders, commented:


The low level of interest in investing as opposed to holding cash is a concern. Despite increasing interest rates, we also continue to live with rising inflation and there needs to be a greater understanding of the impact of this on savings.

The regulator identified that some people are at risk of harm by holding high levels of cash and as an industry we therefore need to communicate the benefits of investing whilst understanding the range of products available and the relationship between risk and reward.

Given that women are more affected by the savings gap for numerous reasons including the gender pay gap and often adopting a more flexible working pattern due to childcare, it is also concerning to observe that females are less likely to invest into stocks and shares.

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