NextWealth Live 2026 – Debate: This house believes that the wealth management industry’s future lies in organic growth – not consolidation

Transcript (generated via AI)

Debate: Organic Growth vs Consolidation

Before debate:           For 61%           Against 39%

After debate:             For 42%           Against 58%

Scott Stevens
Imagine a country facing restaurants. Millions of people want to dine out, but there simply aren’t enough places to serve them. Now, imagine the industry responds like this: restaurants begin buying other restaurants. Chains merge, groups consolidate. But here’s the question: Have we trained the next generation of chefs? New menus? New ways to serve more customers? Of course not – we have simply moved the same restaurants under a few owners and the wealth management industry faces exactly the same mistake.

As demand for advice rises, the supply of advisers is shrinking. If the future of our profession is about serving more people, the solution simply can’t be buying yesterday’s businesses. We must create more advisers, design new advice models, and build client experiences that clearly demonstrate value. Those things are not acquired, they’re built. That brings us to the motion before the House today. This House believes the wealth management industry’s future lies in organic growth, not consolidation.

Let me acknowledge something upfront. Consolidation has played an important part in our industry. It’s brought capital, it’s enabled investment in technology, and it’s created scale. But scale and progress are not the same thing. The real question for the house is simple: How does this profession serve millions more people better in the decades ahead? We’re entering a period where people are living longer with more complex retirement, pension freedoms have increased choice and risk. Inheritance tax planning is becoming the norm for lots and lots of families in the UK, and intergenerational wealth transfer is accelerating. Demand for advice is rising rapidly, yet the supply of advisers is not keeping pace. Around 13 million people in the UK today have between £50,000  and £5 million in investable assets, yet only 4 million receive advice. That’s a 9 million advice gap. If the future of wealth management is about serving more people better, then three things have to happen [SLIDE].

We need to innovate how advice is delivered, expand the adviser workforce and strengthen the trust economy by demonstrating value. So the real debate becomes this: Is the industry’s future better served by firms that continuously acquire existing businesses or by firms that grow by continuously improving the way advice is delivered? Let’s have a look at each of these in turn.

If we’re serious about closing the advice gap , we must confront an uncomfortable reality: the advice model itself, notwithstanding all your efforts in this room, has barely changed in decades. A client meets an adviser. Personalised financial planning follows. Fees are based on assets under management. For affluent clients, this works beautifully, but it does not scale to millions of people. The reason becomes clear when you examine the economics of advice. Imagine if we operated like lawyers or solicitors or accountants, charging for time spent with clients. Studies analysing adviser productivitiy suggest advisers could realistically charge clients for only around about 50% of their time.

When you take the fully loaded cost of a UK adviser (and I’ve been recruiting lots over the last couple of years), salary, technology and infrastructure etc and apply a typical professional service margin of, let’s say, around 35% you arrive at an effective charge-out rate of £314. Now consider something every advisor must now do every single year – an annual review meeting. Now that’s preparation, that’s travel, the meeting itself, documentation and follow-up. All of that, in practice, involves at least three hours of advisers’ time and two hours of a paraplanner/ administrator’s time – and often much, much more. At current cost structures, the single meeting costs £1,200. Reverse engineer that through a typical advice fee, and the conclusion is that a client often needs a minimum of £140,000 in investable assets before the relationship becomes economically viable.

Under the traditional advice model, millions of households will not be served economically. This is the structural reason why the advice gap exists, and that’s why the industry is now is obsessed one thing: lowering that unit cost to serve. Technology and AI, digital planning tools, hybrid advice models, behavioural coaching supported by technology. These are all attempts to solve that same problem: How do we deliver high quality financial guidance to far more people?  Because the future of wealth management will not be one traditional model scale bigger. It will be multiple models designed for different clients. Innovation will ultimately determine which firms succeed but innovation rarely emerges from large integration exercises. It comes from firms that are building, testing, and experimenting. Organic growth allows firms to design propositions and build advice models around how clients actually want to engage. Consolidation, by contrast, turns leadership attention inwards. It’s focused on integration, systems alignment, operational harmonization. It’s important work but it absorbs organisational energy.

After acquisition, the priority becomes integration, not innovation, aligning systems, standardising processes. It’s all necessary work, but when leadership attention is consumed by integration it rarely invents the next advice model, and that’s what we need to do. The firms that win the next decade will not be those that have the largest balance sheets. They will be those with the most efficient advice engines. Organic growth allows firms to design their operating model deliberately. Consolidation on the often inherits complexity, different systems, different pricing, different advice processes. Anyone who’s lived through a major acquisition knows this truth. You rarely inherit a perfectly aligned operating model. You inherit layers of history and layers of history are expensive. The future of wealth management will not be built by buying yesterday’s businesses. It will be built by designing smarter models from the ground up.

Let’s look at that second pillar: the structural challenge – talent. The UK advice profession has a demographic problem. The average age of financial advisers, and I should know, is 58 years old. Roughly 40% are expected to retire in the next decade. So at the very moment demand for advice is increasing, the supply of advisors is shrinking. Research suggests the UK may now need tens of 1000s. I reckon it’s about 50,000 new advisors in the coming decades to meet that demand. And here’s the crucial point, consolidation doesn’t solve this problem. When one firm acquires another one, advisers do not multiply. They simply move from one balance sheet to another. It’s like rearranging seats on an aeroplane and then claiming I’ve added some passengers.

Today, roughly 40 consolidators are competing to buy Britain’s 5,000 advice firms. But buying firms does not create new advisers. It simply moves the same capacity around the industry and that is the fundamental constraint we face. New advice models will help expand access, but we still need more advisers to deliver them. Adviser academies, career change programmes, paraplanner pathways – organic growth forces firms to invest in exactly these things because you cannot rely on buying capacity from elsewhere, you must build it. The industry must produce advisers faster than they retire. Yet, while 40 consolidators are busy buying advice firms, only a handful of organisations are meaningfully investing in adviser academies, and only two of them are consolidators. Which leads to the simple truth:  you can consolidate firms, but you can’t consolidate your way to more advisers. 5000 firms will not solve our advice gap by buying each other. We must expand the profession, not merely consolidate it.Look at pillar three – trust. Wealth management ultimately runs on trust. Clients entrust advisers with their pensions, their businesses, their inheritances and often the financial well-being of multiple generations. Trust is built slowly through relationships, consistency, and demonstrating value. In the years ahead, the value must become more visible. Many clients are financially stretched caring for aging parents, while helping children who cannot fly the nest and this pressure will grow.

If you’ve got a £1 million invested and pay, let’s say, roughly £8,000 a year. That’s a £600 a month subscription fee. It’s entirely reasonable to ask, What am I receiving? What am I receiving for that, especially if the relationship amounts to one advisor meeting in a year of 8,760 hours. How do we demonstrate value? The future of advice must develop more touch points, more engagement and continuous evidence of value. Organic growth encourages exactly this, because firms expand through referrals, reputation and client advocacy. Consolidation, by contrast, often introduces disruption. advisor attrition, changing client relationships, different cultures and advice philosophies. And when relationships are transferred rather than built, trust is eroded. But wealth management is a trust business and trust does not survive being repeatedly transferred, which brings us back to the real stakes of this debate. The question before us today is not how firms grow bigger, it is how this professional becomes bigger and how millions gain more access to advice. So let’s return to the motion before the House. The future of wealth management will be defined by firms that innovate new advice models, expand the advisor workforce and strengthen trusted client relationships. Organic growth strengthens all three. Consolidation simply increases scale. And scale alone doesn’t solve the structural problems facing the profession. Consolidation may build bigger firms, but the future of wealth management will not be built by simply combining yesterday’s businesses. It will built by firms that innovate models, lower the cost of advice and expand access to millions more people. The future will not be acquired. It will be built and it will be built organically.

Natalie Kempster

I thought about how I could argue against organic growth, not the desire for it, but the evidence of it. I could point to Citywire articles on PE firms demonstrating no real growth. Scott’s own strategy of attracting planners with client books, not quite sure that’s organic growth  but rather moving money around. And then I reread the motion: This house believes the wealth management industry’s future lies in organic growth, not consolidation. And there’s some nuance there that I want to explore.

So we both agree on the ‘What’ – we both want to reach more people and secure better financial futures. Where we differ and where this motion fails is the ‘How’. The proposition asks you to believe in a false choice: that our future is organic growth instead of consolidation. This is a fundamental misunderstanding of how industries mature. My argument is simple. Organic growth is the destination, but consolidation is the vehicle. Without the vehicle, the destination is just a distant mirage, and we are all stuck in the departure lounge.

Before we look forward, let’s look at the evidence today. We see private equity growth that is often just asset shuffling. We see strategies focused on acquiring advisers with existing books, and is that organic growth? No – it’s moving money from one pocket to another. If organic growth were the healthy, self-sustaining future that the proposition claims, why do three-quarters of new clients still come from referrals, the least scalable engine imaginable? The first reason to reject this motion is the constraint of capacity. Advice is not a digital-only product. It is a human capital business. Even with the best AI you need paraplanners and compliance officers. The proposition assumes we can simply sell more advice. But if we look at the data, adviser supply, as Scott pointed out, is flat to falling and ageing. Small firms are shrinking under the weight of regulation, and you cannot scale advice faster than you can scale the operating model that delivers it.

At recent NextWealth forums, the declining adviser pipeline and challenges replacing retirees were flagged explicitly. I realise it sounds like I’m making Scott’s point for him but bear with me. Independent coverage reinforces this point. Over 1,000 advice firms have disappeared since 2022 and younger advisor inflows remain weak. You can’t sell what you don’t have the manpower to deliver. Organic growth in a fragmented market is not a strategy, it’s a bottleneck. That leads me to my second point: consolidation is how we build the factory of advice. Consolidation done well is not buying assets, it is pooling resources to fund what small firms cannot: robust technology, sophisticated data and resilient governance.

The market’s real growth engine has been and remains consolidation. Multiple sources point to sustained high M&A activity, with most wealth managers planning acquisition and PE capital still reshaping the market. NextWealth has published research on consolidation, commenting that deal values are rising, the consolidation of consolidators is here, and 84% of acquirers are building in-house MPS. These are classic signs that inorganic and integration is the dominant growth model. We know that deal trackers are showing a high watermark for large transactions in the investment and wealth space, and 65% of those have been PE-backed. Again, this is inorganic capital fueling scale.

The FCA published their own multi-firm review on consolidation last year, and they acknowledge this. They don’t say, ‘Don’t consolidate’, they say, ‘Manage the integration’. Why? Because scale creates the financial resilience to innovate – balance-sheets and not brochures have driven this sector’s growth for a decade. In a mature market, growth is driven by the efficiency of capital, not just the charisma of an individual adviser.

Thirdly, let’s talk about Consumer Duty. The regulator is moving us towards consistent, evidence-based outcomes: a modern advice business has to evidence who its target market is, how it delivers fair value, that clients understand the service and that support is effective. That’s not a marketing challenge, it’s an operating model challenge and fragmented firms, all using different tools, assumptions and processes create variability. Variability is where client harm lives, and it’s where regulatory risk lives. Consolidation, however, allows us to standardize excellence. It tilts the scale towards models that can afford the high cost of compliance. So the proposition’s vision of pure organic growth ignores the reality that modern regulation demands: an industrial strength operating model. Reaching new, less wealthy segments requires investing ahead of revenue. Building digital onboarding and scalable service models is something that small organic-only firms simply don’t have the dry powder to do.

That brings us to our core contradiction in the motion. It asks us to believe that organic growth is the future, instead of consolidation, when modern regulation is pushing firms towards consistent, governed, evidenced delivery. These are the very conditions where scale helps. If we want to expand advice beyond the traditional already wealthy, already referred client base, we need models that can profitably serve an expanded target market. These groups often don’t deliver high revenue in Year One. They require education, digital service models, scalable onboarding, robust communications and sometimes different propositions entirely. Small firms often cannot afford to build that capability. Large groups can so those prerequisites of tech investment, proposition design and monitoring are precisely what consolidation helps fund and standardise.

So if the objective is truly more people helped, then the question becomes what model can invest ahead of revenue, build scalable delivery and maintain consistent outcomes? The answer is not organic growth alone. The answer is organic growth enabled by scale. So rereading NextWealth’s commentary, they note that firms are finally turning to organic growth. After years of technology investment and integration, structural changes, that’s a confession. It proves that consolidation and structural scale are the prerequisites for organic growth. So to the proposition that suggests the future is passengers (clients) and  not aeroplanes (the firms), I say passengers are the point, but you still need aircraft to get them off the ground and avoid them, most importantly, being stuck at Terminal Five. So don’t vote for hope. Vote for a reality, reject the motion not because organic growth isn’t desirable, but because without the infrastructure of consolidated, scaled businesses, it is impossible to achieve

Scott – Rebuttal

I do acknowledge that the case you just made probably sounds quite familiar to all of you. I noted three things, which were: consolidation brings scale, second it brings capital and technology, and third, it creates stronger and more professional firms. So on the surface, actually, that was really persuasive. Thank you. But when we examine more closely, they do not actually solve the problem facing the industry, because the problem facing the profession is not scale, it’s access, and that’s the point: scale does not close the advice gap.

We’ve just heard that larger firms are more efficient. Perhaps they are but efficiency and wealth management does not automatically translate into serving more people. Because the real constraint the industry has is not number of firms, it’s the number of advisors, as I spoke about earlier. When one firm acquires another, advisers do not multiply, they simply move from one balance sheet to another: same clients, the same advisors, the same capacity, just fewer logos on the door.

That may create larger firms but it does not create more advice. And the advice gap will not be solved by firms buying each other. I think the other point is that capital does not automatically create innovation. Natalie wants you to believe that consolidation brings capital and that capital enables technology and innovation. She referenced that’s where she thinks that growth is going to come from. But innovation rarely emerges, as I said before, from the large integration exercises. And let’s be honest, we’re about to have SJP up here and we’ve had Steve from Quilter. If I look at those large businesses, let’s be honest SJP’s proposition hasn’t really evolved in 25 years!! So that scale alone does not create innovation. Okay? I lost one vote. I got the rest of you. So after acquisition, the priority becomes something entirely different, aligning systems, standardising processes I spoke about before, but reconciling different pricing models and investment propositions. Anyone who’s lived through that I’ve been at firms that have done that, it’s all consuming. So ask yourself, in the years after an acquisition are leadership teams designing new advice models or are they integrating what they’ve just bought? Because you can’t the redesign the future while you’re busy integrating the past.

Finally, there’s the argument that these bigger firms create stronger, more professional firms –interesting. Natalie is right that consolidation can create larger, better capitalised firms, but we should look closely at what sits beneath that financial strength. Much of this expansion is driven by private equity, often supported by debt and built with a clear intention to exit. So the model is not just about building enduring businesses, it’s about building assets to be sold, which brings different incentives, shorter time horizons, pressure on returns, decisions shaped as much valuation as by client outcomes. Equally, professionalism does not come from ownership structures. It comes from standards, from training, from culture and from the judgement of advisers themselves. Law did not become professional through consolidation. Medicine did not become a profession through mergers. Professions are strengthened by developing people. So yes, consolidation may create larger firms and even financially-engineered strength, but a stronger profession is not built by acquiring businesses. It’s built by investing in people, and that is the work of organic growth

Which brings us back to the real question today which is not how firms become bigger, but how this profession becomes bigger? How we serve millions more people, how we create more advisers,  how we design advice that reaches far beyond today’s clientbase. Because this is the challenge in front of all of us. Yes, consolidation can build bigger firms, but it does not create advisers. It does not fundamentally lower the cost of advice, and it doesn’t close the advice gap. It moves the pieces around the chessboard – it doesn’t change the game. Organic growth does something different. It forces innovation, it develops new talent, it expands reach. It builds the future rather than assembling the past. So today, you have heard two visions, one that grows by combining what already exists (with a little bit of fudge), and one that grows by creating what does not yet exist. The future of wealth management will not be decided by who owns the most advice, but by who extends it the furthest, and that future will not be acquired. It will be built organically.

Natalie – Rebuttal

This is interesting, isn’t it, because I agree with nearly everything Scott has said but you’ve haven’t given us any solutions as to how we build organically. How do we attract clients? How do we have scalable models without genuinely having bigger, consolidated businesses?  Are we suggesting the heavy lifting of consolidation is mostly done so everyone  can now go away and drive organic growth?

I’m  not sure that’s going to work either. I think everything we’ve learned today is that the scale of the advice gap is huge. Cathi can’t grow enough advisors. Helens did the maths and I don’t know how many pods we said we would need, but I think it was in the 1000s. I don’t quite get how you can do that organically. I think you have to bring businesses togther to create some efficiencies. And when you’ve got that kind of scale, you can have an Adviser Academy. I think the problem still is that we’re arguing that these two things are in contention with each other, and they’re not. We need organic growth, but we also need to recognize that that can only come through consolidated, well governed businesses, Those two things are not mutually exclusive – they are symbiotic. We can’t reduce the costs to serve through innovation alone. I don’t know about this idea that when you’re consolidating businesses and integrating them, you can’t think outside the box and your leadership team can’t innovate. I don’t know about you, but when we integrate businesses, we have robust, repeatable processes. So that kind of runs itself once you’ve done the first couple. So on that basis, I urge you to continue to think, Is this realistic? Can we grow organically out of our advice gap? Can we invest 1000s of advisors overnight? No, we can’t. But can we build and develop the businesses that are already out there and innovate through that method?