For Professional Advisers only

• Generational divide on advisers’ views on tech and social media, but alignment on the importance of service and human connection
• Greater support is needed to develop the next generation of business owners
• Firms can learn from younger advisers to better serve the next generation of clients
• Opinion is divided on vertical integration as an exit option, with some advice firm owners seeing few benefits for clients, while others believe there are ways to make it work for all parties

A research report published today by adviser platform Wealthtime, explores the topic of succession planning for advice firm owners and whether the current adviser business model meets the needs of future advisers. 

Succession planning in an age of employees is the first of two reports published by Wealthtime in partnership with Octo Members, the UK’s fastest-growing community for financial services professionals. Based on focus group discussions with advisers, it includes verbatim responses from established business owners drawn from Octo’s membership, alongside insight from Wealthtime’s Adviser Experience (AX) Board. The report spans a wide spectrum of topics from support for preparing the next cohort of business owners to vertical integration (VI), as well as the cultural differences between adviser generations and the implications for future service expectations.

The adviser generational divide

The focus groups revealed that firm owners see a clear generational divide between themselves and younger advisers, particularly around tech and social media. However, all ages agreed on the importance of retaining the human connection with clients.

“Great service is a lot about going back to basics, making sure you stay on the front foot. Not having to have your clients chase you for things. Using tech but keeping the human contact and relationship.” Focus group participant

Keith Furniss, Wealthtime’s Business Development Director, comments: “A large part of the value of advice is in the relationship between client and adviser. But using technology alongside the human relationship can improve the client and adviser experience and the effectiveness of advice as well as keeping costs down.”

Throughout the sessions, a recurring theme was how both generations can learn from each other. In particular, the discussions emphasised that harnessing the understanding and experiences of younger advisers will help firms better service tomorrow’s clients.

“I do worry at my age now, is the technology of the next generation going to be beyond my capacity of understanding? Hence why I’m now recruiting younger advisers.” Focus group participant

Keith says: “Tapping into the knowledge and skills of younger advisers can pay dividends for firms, especially when it comes to understanding the needs of future generations of clients. Consolidators are now reviewing the age profile of advisers when calculating firm valuations, so there’s a clear view that young advisers are crucial to the ongoing success of firms.”

Support for the next generation of advisers

The discussions also highlighted the need for greater support to prepare younger advisers to become tomorrow’s business owners. This point is particularly pertinent in light of the latest FCA adviser data, which shows a fall in the number of advisers and advice firms for the first time since 2016[1]. When considering the options for nurturing new talent, many raised concerns about provider academies, either because there are too few of them, or due to their potential to create a sales-dominant culture. 

“I’m concerned [with provider academies] that we don’t end up recreating the sales focus that was there 20-30 years ago. It is not a financial services product sales role. We get approached by young people now that want the things our business wants to offer.” Focus group participant

Keith says: “Making business ownership attractive starts with equipping the next generation with the skills they need to succeed. Given the falling numbers of advisers and firms, filling the training void left by the old LifeCos and networks is a key issue for the industry to solve.”

Vertical Integration

On using VI as an exit option for advice business owners, the focus groups unearthed two opposing camps. The first sees major inadequacies in the existing models, with participants citing problems including culture clashes and a lack of value for clients. The second believes vertical integration can be successful, especially given increasing regulatory demands, as long as both parties enter discussions with full transparency and due consideration for the needs of the client.

“In order for any VI deal to work, both parties need to be completely upfront about the deal being struck. If they are not both transparent and explicit about what they will and won’t do, then it’ll just disappoint both sides.” Focus group participant

Keith comments: “At Wealthtime, we’ve been open about exploring vertical integration acquisitions that will benefit our customers as well as support our business growth ambitions. There are clearly concerns about the inadequacies of some existing VI models, but we believe there is a middle ground, which supports independent advice and provides benefits to clients as well as to the advice firm and the acquirer.”

Commenting on the report series, Keith adds: “We commissioned this research as we know that it’s in everyone’s interests to have a robust and vibrant advice profession equipped to meet the needs of generations to come. Without a healthy pipeline of new advisers, we risk fewer people benefiting from their expertise and so being less financially resilient.

“In our next report, we gather valuable viewpoints from industry newcomers on how they see the service they deliver evolving, what they want from their careers and how they anticipate meeting the needs of tomorrow’s clients.”

Download a copy of the first report here.

Notes to Editor:

Press contact

Jenette Greenwood, PR Director the lang cat

07710 392303 / jenette@langcatfinancial.com

About the Wealthtime Group  

Private equity firm AnaCap Financial Partners owns Wealthtime, Wealthtime Select, and Copia Capital. Patrick Mill is CEO of all three businesses in the Group.  

Combined, the platforms have over £11.3bn of pension and investment assets under administration (AUA) and over 76,000 clients (as of Jan 2024). AUA is split £8.85bn and £2.45bn, Wealthtime and Wealthtime Select respectively. 

Copia Capital, the discretionary fund management (DFM) part of the Group is a pure B2B DFM that works exclusively with advisers to provide a range of managed portfolio services. These include its MPS Custom service, offering customised portfolios to advisers which are constructed to meet the adviser’s retail clients’ needs; its ‘ready to go’ MPS portfolio products; and the added-value MPS Plus range.  

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[1] The retail intermediary market data 2023 | FCA