Back to the future: the cycle of advice models

May 29, 2026

It’s easy to look at the current pressure on advice firms and assume we’re in entirely new territory. Consumer Duty, rising costs, fee scrutiny, and technology spend, it can feel like the model itself is under threat. IFA Magazine’s Deputy Editor Jenny Hunter explores how what we’re seeing is less a break from the past and more a continuation of it. Adviser business models have always evolved in response to the same underlying forces: regulation, client demand and commercial viability.

Right now, pressures are building again. Firms are facing tighter margins, higher compliance expectations and increasing technology investment, to name just a few. At the same time, there’s growing demand for more accessible, lower-cost advice. The traditional model still works well for some clients, but it’s becoming harder to apply it consistently at scale.

The direction of travel from the FCA is clear. Its Financial Lives Survey highlights the persistent gap between those who need advice and those who receive it¹. Meanwhile, proposals around simplifying advice and CP26/10 reinforce the need for a broader “range of services”, rather than a single, standardised approach².

The recurring tension at the heart of advice

If this feels familiar, that’s because it is. The advice sector has always been shaped by a set of competing pressures: profitability versus accessibility, bespoke advice versus scalable delivery, and high-touch service versus operational efficiency.

Before RDR, commission-based models created trust issues. RDR addressed this through transparency and professionalism, and now, the focus has shifted again, this time towards affordability, value and reach.

The current policy agenda reinforces that shift. The Advice Guidance Boundary Review, alongside the push towards targeted support and simplified advice, is encouraging firms to think more flexibly about how advice is delivered³.

Each cycle brings the same core questions back into focus: how firms charge, who they serve and how they deliver advice. The difference now is the pace of change and the increasing pressure to get those decisions right.

Why the 1% model is under pressure

At the centre of the current debate is the traditional percentage-based fee model. For many firms, the 1% ongoing charge has provided a stable, scalable way to deliver full-service advice aligned with assets under management.

But it is becoming harder to sustain as a one-size-fits-all solution.

From an affordability perspective, it simply doesn’t work for all clients, particularly those with lower levels of wealth. That has contributed to the advice gap, something the FCA has been clear it wants to address¹.

Consumer Duty has added another layer of pressure. Firms are now expected to demonstrate clear, ongoing value for the fees they charge, increasing scrutiny on whether a flat percentage is appropriate across different client segments.

Client expectations are also changing. Some still want a full-service, ongoing relationship. Others are looking for more targeted, lower-cost or one-off advice. Industry research also points to firms increasingly evolving their charging structures and service segmentation in response to these pressures⁴.

Regulation is supporting this shift. CP26/10 explicitly backs more flexible, limited-scope services, while the wider policy direction encourages firms to move away from a single, uniform model².

The result is not the disappearance of the 1% model, but its repositioning. It becomes one model among several, rather than the default across all clients.

What hasn’t changed

For all the focus on change, the fundamentals of advice remain the same.

Trust still sits at the centre of the adviser-client relationship. Clients continue to value reassurance, guidance and long-term planning. Behaviour remains one of the most important drivers of outcomes.

These are the elements that justify the value of advice. But they don’t dictate how advice must be delivered, or how firms choose to charge for it.

What is changing: delivery, pricing and structure

Where the real shift is happening is in how advice businesses are structured.

Charging models are becoming more varied, with firms exploring subscriptions, fixed fees and hybrid approaches alongside traditional percentage-based charging⁴. Service propositions are also becoming more clearly segmented, with different tiers designed around different client needs.

At the same time, there is a growing focus on cost to serve. Operational efficiency, compliance processes and service delivery are now central to commercial sustainability.

Regulation is enabling this flexibility. The move away from a strict annual review requirement towards a more “periodic” approach allows firms to tailor their services more effectively. The emphasis is increasingly on delivering value, rather than following a prescribed structure.

Technology is supporting this shift. Research from NextWealth highlights how AI and emerging technologies are improving efficiency and helping firms serve more clients⁵.

Technology as an enabler, not a replacement

Technology is often positioned as a disruptor, but in practice, it is enabling firms to evolve their business models.

Automated workflows, AI-assisted documentation and digital onboarding are helping reduce costs and improve consistency. This makes it more viable to deliver lower-cost, more flexible services without compromising quality.

What technology doesn’t do is replace advice. It supports it. It allows firms to scale expertise and improve delivery, rather than removing the need for professional judgement.

In that sense, this is simply the latest phase in a longer cycle of innovation, following earlier waves of platform and CRM adoption.

Perspective as a competitive advantage

Against this backdrop, the firms that succeed are unlikely to be those that simply react to regulatory change.

Instead, the focus is shifting towards building sustainable business models: clearly defined client segments, efficient delivery and pricing structures that reflect the value being delivered.

The Investment Association has stressed that improving access to advice must be supported by commercially sustainable delivery models⁶.

A cycle, not a conclusion

What we’re seeing today is not the end of a model, but the next stage in its evolution.

The industry is not abandoning the structures that have worked but expanding them. The future of advice is unlikely to be built on a single pricing model or service proposition. Instead, it will be shaped by a mix of approaches, designed to meet different client needs at different stages.

And if history is any guide, this won’t be the last time adviser businesses are asked to adapt.