NextWealth report predicts five significant shifts in financial advice by 2028 

by | Feb 20, 2024

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NextWealth has published its Future of Financial Advice report, which uses data and insights to highlight the disruptive forces that are determining the future shape of the retail financial advice market and predicts how financial advice will look in five years’ time. 

The report outlines five significant shifts predicted to happen by 2028: 

1. Small firms will continue to thrive. 


Small firms (up to 100 employees and up to £10m in revenue) will have defined a robust operating model and will have a partner for compliance support. Most will adopt a single source tech stack and they will focus on a client niche or local community. 

Heather Hopkins, Managing Director of NextWealth comments: “In spite of a long history of small and micro advice firms, our prediction that small firms will thrive in the future seems to fly in the face of existing views. However, our research highlights that while there is a high and sustained level of consolidation, this remains matched by the replacement rate of small advice firms spinning out of larger corporates and new registrations.” 

2. The number of clients served will grow by 30%. 


Firms will establish propositions suitable for clients with smaller portfolio values and advised clients will not all receive the same service. 

Heather Hopkins comments: “Firms will use segmentation models to define propositions, making clever use of tech and investment solutions to meet client needs. The concept of spending two or three hours at particular life moments face-to-face with a trusted adviser will not disappear, but where it suits client needs and preferences, they will increasingly self-service and interact with other members of their client service team. Notably, firms will increasingly use a team-based approach to supporting clients, backed by slick processes, increasing capacity for firms that seek to work with a larger number of clients.” 

3. Gradual shift away from asset-based pricing. 


Heather Hopkins comments: “As a result of the continued downward pressure on fees, combined with new service-based propositions and the greater focus on delivering value to clients, we expect a gradual shift away from asset-based pricing towards new fee structures.” 

4. Firm size will be measured differently. 

Heather Hopkins comments: “Measuring firm size based on assets and number of advisers is outdated. While data on employee numbers and revenue is harder to get, we think they are more important. Our report lists six adviser business segments which all go a step further to defining a variety of business and operating models, recognising some of the distinguishing features between advice firms.” 

5. AI will play a key role in compliance checking 

Heather Hopkins comments: “We found that regulation is regarded as hindering the growth of the advice market, although everyone we spoke to emphasised the importance of a good regulatory regime and framework. The regulatory burden is felt acutely by the small firms that continue to be vital to the profession, and tighter regulatory oversight of significant numbers of such firms is currently a major challenge. We predict that AI will be used to support the scaling of compliance checking, which should help small firms to present a more manageable interface with the regulator.” 

NextWealth’s Future of Financial Advice report is a comprehensive overview of where financial advice is now and how it will adapt and change over the coming years. It explores seven major disruptive forces that are determining the future shape of the retail financial advice market. It is designed to provide advice firms and suppliers with insights that will help with strategic and tactical plans for robust future businesses. 

Heather Hopkins concludes: “The future is created in incremental moments; small changes, new capabilities and the introduction here and there of different ways of thinking and operating. When we look around in 2028 it may feel that nothing has changed but when we look back, everything will have.” 

The Future of Financial Advice is available for purchase from NextWealth.

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