United Kingdom (UK) Financial Advisors Market Overview by Financial Advice Firms, Opportunities and Threats, 2023 Update

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United Kingdom (UK) Financial Advisors Market Report Overview

The UK financial advisors market is undergoing a period of consolidation, as a result, the composition of the market is changing slowly but surely owing to ready sellers and willing buyers. Single advisor firms still dominate the market. However, the average number of advisors per firm is rising, indicating a shift towards medium-sized and large outfits. Financial advisors play an important role in serving retired individuals and those approaching retirement. However, the enduring challenge lies in closing the advice gap, as less than 10% of consumers have accessed regulated financial advice. The Financial Conduct Authority (FCA) is revisiting this issue with the new Advice Guidance Boundary Review (AGBR); this is likely to be an increasing focus for advisors now that implementation of the Consumer Duty rules is well underway.

The United Kingdom (UK) Financial Advisors market research report discusses the key trends shaping the UK financial advisory market in 2023. It covers the market size and growth forecasts of the financial advisory market in the UK (including profitability), merger and acquisition activity, as well as the key threats and opportunities cited by advisors.

Key Channels ·        Independent Financial Advisors

·        Investment Management Companies (Platform Only)

·        Advisors at Client’s Main Bank

·        Investment Management Company

·        Investment Platform at Client’s Main Bank

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UK Financial Advisors Market Critical Success Factors

Explore the opportunities offered by generative AI: Generative AI has dominated the media agenda over the last 12 months. While it is still in its nascent stage, the consensus is that generative AI tools will increasingly be used in the world of work. Advisors must explore how the technology can help enhance their productivity, for example, in the area of letter writing and summarizing regulations, as well as training and skills requirements.

UK Financial Advisors Market Segmentation by Channels

The key channels preferred by the UK financial advisors market are independent financial advisors, investment management companies (platform only), advisors at the client’s main bank, investment management company, and investment platform at the client’s main bank. Among investors, financial advisors are the preferred channel for arranging investments.

In 2023, more than 24% of investors selected financial advisors. It is followed by competing channels such as investment management company platforms and bank-based advisors.

UK Financial Advisors Market Analysis by Channels, 2022 (%)

UK Financial Advisors Market Analysis by Channels, 2022 (%)

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UK Financial Advisors Market Trends

One of the major themes for the UK’s financial advisors is managing their business and advising clients against the difficult macroeconomic backdrop. The 2023 and, to date, 2024 UK financial advisors market have proved comparatively stable after the particularly volatile 2020-2022 period. However, there are still several challenges to contend with. For instance, economic growth is stagnating, the performance of domestic financial markets is lackluster, and a General Election is looming.

In addition to that, there is a heavy regulatory burden to contend with. Consumer Duty continues to be a key theme, although with implementation now well underway attention is turning to new regulatory activity, notably the AGBR. Finally, financial advisors are also investigating the opportunities offered by an aging population, the potential of ESG investing, and how generative AI can bring productivity gains.

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Segments Covered in the Report

UK Financial Advisors Market Channels Outlook

  • Independent Financial Advisors
  • Investment Management Companies (Platform Only)
  • Advisors at Client’s Main Bank
  • Investment Management Company
  • Investment Platform at Client’s Main Bank

Scope

  • This report discusses the key trends shaping the UK’s financial and investment advice space throughout 2023 and beyond.
  • It covers the size and growth of the financial advice market (including profitability), merger and acquisition activity, as well as the key threats and opportunities cited by advisors.
  • The report also discusses how market trends such as ESG, artificial intelligence, and regulation will shape the sector in the future.

Reasons to Buy

  • Understand the latest data on the size and composition of the UK financial advice market.
  • Find out about the latest M&A deals in the consolidating financial advice space.
  • Learn who uses financial advisors and what their motivations are for doing so.
  • Discover the key trends and themes affecting the financial advice industry.
  • Understand the current regulatory challenges that financial advisors are facing.
  • Learn more about how advisors can prepare for The Great Wealth Transfer.
  • Uncover the opportunities offered by ESG investing and the productivity gains of generative AI.

Perspective Financial Group
Fairstone
Wren Sterling
and Skerritts
Lync Wealth Management
Sheafmoor Money Management
North Financial Management
Liberate Wealth
Soderberg & Partners
Canaccord Genuity

Table of Contents

  • 1. Executive Summary
  • 1.1 Market Overview
  • 1.2 Key findings
  • 1.3 Critical success factors
  • 2. Market Overview: Financial Advice Firms
  • 2.1 The number of advice firms fell by

    1.1% in 2022

  • 2.2 Consolidation is changing the structure of the market
  • 2.3 Average revenues and profits grew in 2022
  • 3. Financial Advisors and their Customers
  • 3.1 IFAs are the go-to channel for investments
  • 3.2 Financial advice is only reaching a small proportion of consumers
  • 4. Key Trends in the UK Financial Advice Market
  • 4.1 A lackluster economy, high inflation, and weak financial markets make for a challenging backdrop
  • 4.2 Regulation: Consumer Duty has dominated the agenda, but attention now turns to AGBR
  • 4.3 New regulations should boost confidence in ESG investing
  • 4.4 Growth in the over-65 population and intergenerational wealth transfer are key opportunities for financial advisors
  • 4.5 Generative AI introduces a new way of working
  • 5. Appendix
  • 5.1 Abbreviations, acronyms, and initialisms
  • 5.2 Definitions
  • 5.3 Methodology
  • 5.4 Secondary sources
  • 5.5 Further reading
  • 6. About GlobalData
  • 7. Contact Us

Table

Table 1: Selected financial advisor acquisitions, 2023

Table 2: Selected financial advisor acquisitions, 2024

Table 3: Examples of financial advice firms backed by private equity and other investment houses

Table 4: Average revenues of financial advice firms, 2018–22

Table 5: Average pre-tax profit of financial advice firms, 2018–22

Figures

Figure 1: The number of financial advice firms continued to decline in 2022

Figure 2: Small financial advice practices dominate the market, but their numbers are slowly coming down

Figure 3: Restricted and dual-status firms represent just over 10% of the market

Figure 4: The number of ongoing clients at financial advice firms jumped in 2022

Figure 5: Professional indemnity insurance premiums as a percentage of regulated revenue have continued to increase

Figure 6: IFAs are the preferred channel for arranging investments

Figure 7: The convenience of IFAs is considered a key draw

Figure 8: A third of respondents who favor IFAs for arranging investments are aged 65 or over

Figure 9: Traditional banks and building societies remain the first port of call for those opening new investments

Figure 10: Older consumers place more value on a trusted brand compared to younger generations

Figure 11: Inflation started to moderate in 2023

Figure 12: The FTSE 100 has lagged international peers over the last three years

Figure 13: The number of adults with a high risk tolerance and significant cash holdings is increasing

Figure 14: The over-65 population is projected to increase year on year through 2038

Figure 15: The majority of pension pots are withdrawn without advice or guidance

Figure 16: AI job postings in the UK financial services industry have risen notably since 2020

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