Advice firms face three interconnected challenges: growth, cost to serve and capacity. Each on its own is manageable. Together, they present a structural issue for our industry.

Let’s start with growth. The client base for financial advice is ageing. According to Financial Conduct Authority data, around 85% of advised clients are over 55, with more than half over 65. That matters because growth isn’t just about winning new clients. Firms must also replace clients who are drawing down assets in retirement. Organic growth becomes harder when assets are naturally flowing out of the system.

Cost to serve is the second challenge. The best proxy we have is fees. In 2025, the average cost of advice was 77 basis points, up 9 basis points from the year before, according to our NextWealth Fee Benchmarking work. Early data for 2026 suggests fees have stabilised. Firms cite rising compliance costs, higher staff costs and more expensive premises. Inflation is hitting advice businesses just as it is their clients.

The third challenge is capacity. Advisers spend only around a third of their time with clients. The rest is absorbed by compliance and admin. Demand, meanwhile, remains strong. In our IFA DNA report with Fidelity, half of advisers said demand for their services would increase in the next five years. At a Quilter Financial Planning event last week, all but one adviser in the room expected demand to increase. The one hold out thought demand would hold steady.

This imbalance between demand and supply is why growth is the central theme of NextWealth Live at the Royal Institution. We currently reach just 8% of the UK population with financial advice. The question is not whether growth is possible, but how we redesign business models to deliver it while protecting client outcomes.

With less than 50 tickets remaining, get yours while you can.

Heather Hopkins

Managing Director & Founder, NextWealth

FAQ:

What are the main challenges facing advice firms today?
Advice firms face three interconnected challenges: growth, cost to serve, and capacity. Individually they can be managed, but together they create a structural issue for the industry.

Why is growth difficult for financial advice firms?
The client base for financial advice is ageing — around 85% of advised clients are over 55, and more than half are over 65. Growth isn’t just about acquiring new clients; firms must also replace clients who are drawing down assets in retirement.

How are costs impacting advice firms?
The average cost of advice was 77 basis points in 2025, reflecting rising compliance, staff, and premises costs. Inflation is affecting both businesses and clients, putting pressure on margins.

How can advice firms achieve growth despite these challenges?
Growth is possible, but it requires redesigning business models to manage costs and capacity effectively while maintaining strong client outcomes. NextWealth Live explores strategies to address this.