Here are seven of my 2025 predictions for the wealth management industry.

Fewer people will have access to on-going advice at the end of 2025 than at the start. In the medium term (3-5 years) access to advice will rebound but 2025 will continue to see a shrinking in access to advice.

Mark Duckwork, CEO of Schroders Personal Wealth said at our NextWealth Live conference last year that one of the measures of success of our event should be to track the number of people with access to on-going advice. Sadly, the mounting regulatory burden keeps getting in the way on this one.

The cost of delivering advice keeps going up, forcing financial advisers to increase minimum fee income. This has resulted in an increase in client portfolio values and forced many advisers to ‘offboard’ clients. Half of financial advisers said they offboarded clients last year and three quarters offboarded more than usual. (Source: Getting Onboard with Offboarding)

2.    Consolidation of consolidators

For the past two years we’ve predicted consolidation among advice firm consolidators. While we’ve seen some smaller acquirers coming together (i.e. Soderberg’s investment in Fidelius), we’re thinking of something larger-scale. The biggest to date has been Titan Wealth’s acquisition of IWP. We think there’s more to come.

Some PE firms hold multiple consolidators such as Pollen Capital who invested in Kingswood and Mattioli Woods in the last 12 months. These are obvious candidates for consolidation among consolidators though maybe not in 2025.

Other PE firms will look to exit positions this year, creating opportunity for buyers. Bashing together a bunch of small businesses is hard work and the number of firms looking to sell has decreased. To achieve the scale some firms seek will require a merger of equals or near equals. Expect to see more consolidation among consolidators. Find out more in our Consolidating Acquirers Report due out late March.

3.    Adviser-consolidator (and DFM) as manufacturer

When I set up NextWealth, one of the first market reports I wrote was on the rise of segregated mandates in retail. I called it ‘Wealth Managers as Manufacturers.’ SJP, Quilter and OpenWork have long offered funds on a sub-advised basis (or using segregated mandates). Hargreaves Lansdown, Brewin Dolphin and others followed suit. We predicted a tsunami of money moving to segregated mandates. There was a huge wave in 2019/2020 and we think we’re on the cusp of another wave of money moving to segregated mandates or sub-advised funds, particularly from advice firm consolidators. ACDs have upped their game, fund managers are getting in the game and there are more firms at a size to make seg mandates work. Another driver is the need for operational efficiency in advice firms.

We’re also seeing a growing number of DFMs with a higher allocation to active using their own funds (often using segregated mandates) to bring down cost, reduce risk and operational overheads and to access a wider investment universe. In our December report on Discretionary MPS 28 DFMs included in-house products in the MPS. Firms like Waverton and Quilter Cheviot preach the virtues of the approach as core to helping them control costs and access to a wider investing universe. This trend will continue and accelerate.

We’ll be updating our work on segregated mandates later this year. Get in touch to share your views.

5.    Quilter, Tatton and Timeline will dominate MPS sales

In December, we published our Discretionary MPS Proposition Comparison report, drawing on data from 52 DFMs, our largest-ever sample. Assets in discretionary MPS grew 36% in the year to Q3 2024 almost double the rate from the previous year. In our report last June, we predicted that Quilter Wealth Select, Tatton and Timeline would emerge as dominant players. Their trajectory continues with each DFM adding over £4bn in assets. We continue to back our prediction that Timeline will break into the top 3 and we will continue to see these 3 providers dominate the net asset growth rankings. Our next report in June 2025 will give us the answer with a shuffling of the order for the largest 5 DFMs by AUM expected.

6.    Service + software solutions will ramp up AI adoption in wealth management

Some financial advice firms have realised impressive efficiencies through the use of AI. But the use cases have been narrow and haven’t moved the needle much in helping firms deliver cheaper, better or faster advice. I predict that in 2025, we’ll see an explosion in adoption of service + software. Outsourcing admin, paraplanning and compliance will be taken to a new level by firms offering human intensive services and layering it with a heavy dose of AI to scale with less labour. This will allow wealth management firms to drive huge efficiencies in accounting, compliance, customer service, etc.

I look forward to seeing this come to life in our AI Lab membership group. We have room for a few more members, get in touch if you’d like more info.

7. NextWealth Live tickets will sell out (again!)

We’ve already sold half of tickets to NextWealth Live, taking place 18 March 2025 at the Royal Institution in London. I predict we’ll sell out again – get your tickets early online or by emailing us here.

Happy New Year from me and the team at NextWealth. We wish you many benchmark beating returns!

Heather