Financial planning firms in the UK have a positive outlook for growth in the coming 12 months, with more than eight in 10 expecting to boost assets under management, new research has revealed.
The Financial Planning Growth Index from Saltus Partnership Programme and L.E.K Consulting, showed 70% of firms are optimistic about the next year, with 47% confident and 23% feeling very confident about growing their revenues. In addition, 84% said they expect assets under management to increase.
The index showed varying expectations depending on the firm’s size, with larger businesses more optimistic than mid-size and smaller firms. Half (48%) of larger firms with AUM above £300 million, expect their AUM to grow by at least 10% and one in ten (11%) expect growth of at least 20%. Smaller firms, those with AUM up to £50 million, are more cautious, with 44% expecting growth to be no more than 5%. A quarter (25%) of smaller firms expect the next 12 months to be flat or to see a decrease in AUM.
The research found 40% of firms expect organic growth to be the main driver of rising AUM, followed by client referrals (32%), improved investment performance (26%), technology and automation (15%), partnerships (10%) and digital marketing or social media (6%).
Despite this positivity, firms identified a number of hurdles, with regulatory compliance their greatest challenge (29%). This was followed by political intervention (20%), rising operational costs (19%), economic uncertainty (14%) and talent acquisition (8%).
Over the longer term, firms said the evolving regulatory environment remains a major concern, especially for larger firms, with 21% identifying regulatory changes as likely to have the biggest impact on the industry in the next three to five years. This was followed by technological advancements and a widening of the advice gap and the cost to serve.
Nick Heath, head of the Saltus Partnership Programme relationship team, said: “Senior leaders in the financial planning sector remain optimistic about the future despite a number of headwinds impacting their businesses. To deliver growth, firms must be adaptable in their approach and focus on streamlining operations, continuing to attract and develop talent and embed innovation to drive the best possible outcomes for clients.
“The role of technology in enabling firms of all sizes to meet these challenges head on and underpin their growth ambitions remains paramount. Innovation is no longer a luxury available exclusively to the largest firms in the market, and the Saltus Partnership Programme is designed to enable firm leaders to support across the piece including financing, access to tech and a range of operational services that will enable growth and continue doing what they excel at, looking after their clients.”
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