Unlocking Opportunities in Financial Planning for the Next Generation

Earlier this week I posted on LinkedIn following an article in Professional Adviser about the opportunity that retiring financial planners presents for the next generation of talent coming into our industry and following some good engagement, I wanted to expand on this.

The financial advisory landscape is undergoing a significant transformation, presenting young advisers with a wealth of opportunities. While it’s true that many young professionals may see the chance to inherit clients from retiring advisers as a substantial opportunity, it’s essential to realise that the future of financial planning extends beyond becoming the new custodian of existing clients.

To truly understand the evolving world of financial planning, we need to shift our focus towards the emerging generation of wealth inheritors and their evolving needs. Financial planning, to remain relevant and effective, needs to pivot towards two key pillars: Relatability and Accessibility.

Relatability: Understanding the Next-Generation of Client

Younger clients, who will soon be the primary beneficiaries of the largest transfer of wealth in history from the Baby Boomer generation, are seeking a more digitised and automated yet fully personalised approach to financial planning, a very difficult balance to strike. Furthermore, it’s not just about financial objectives; they want their advisers to understand their broader life goals and objectives. This evolving client base is emphasising well-being, and many are eager to incorporate it into their financial planning strategies. This holistic approach is not just a fantastic initiative; it’s a necessary response to the changing landscape.

Another significant trend we observe is the growing interest in financial education. The next generation of clients doesn’t just want a financial plan in place to achieve their objectives and someone to drive them to achieving them. They want to comprehend how and why various financial mechanisms work to their advantage and be empowered to strive towards financial freedom themselves. This marks a fundamental shift in the role of the adviser. Advisers are transitioning from being mere financial planners to becoming financial coaches who empower their clients with knowledge.

Moreover, the method of delivering financial advisory services is also undergoing a transformation. Clients are looking for more regular contact with their advisers, but they prefer shorter, digitised formats that fit into their busy lives. The traditional model of an annual review meeting may no longer suffice. Adaptation is key to meeting these evolving expectations.

Accessibility: Bridging the Gap to the Unadvised

While the opportunity to inherit clients from retiring advisers is indeed promising, it’s crucial to acknowledge that there is a significant portion of the population that still lacks access to financial advisory services. According to estimates, only 11% of UK adults have sought financial advice in the last two years. This statistic raises a pertinent question: What about the other 89%?

Young advisers must recognise that the true opportunity lies in making financial planning accessible to all. Inheriting clients is one part of the equation, but there’s an untapped market comprising the vast majority of the UK population that financial planning is currently not servicing.

To address this need and seize the opportunity, advisers can leverage technology, specifically artificial intelligence (AI). By integrating AI into financial planning models, advisers can create personalised, highly scalable, and cost-effective advisory services. AI can assist in automating routine tasks, providing customised financial strategies, and delivering real-time insights to clients, all of which contribute to making financial planning more accessible.

The benefits of leveraging AI in financial planning are two-fold. It not only enhances the efficiency of advisers but also significantly reduces the cost of delivering advisory services. These cost savings can be passed on to clients, making financial planning more affordable and, consequently, more accessible.

By combining the principles of relatability and accessibility, the next generation of advisers can make substantial strides in the financial planning industry. In addition to inheriting clients, they can tap into the vast population of individuals who, until now, have not had the opportunity to benefit from financial advisory services.

A Bright Future for Financial Planning

The landscape of financial planning is evolving, and the future belongs to those who can adapt to the changing needs of the next generation of clients. Relatability, with its focus on digital yet personalised, holistic planning, and Accessibility, through the integration of AI-driven cost-effective models, are the keys to thriving in the financial planning industry.

Advisers who recognise the importance of addressing the underserved population, while providing high-quality, relatable, and accessible services, are the ones who will be at the forefront of the industry’s future. The opportunity is not just in inheriting clients; it’s in shaping the future of financial planning to benefit all.

For further reading on this and for more information on some of the data points mentioned above, please check out:

https://www.ey.com/en_gl/financial-services/how-will-you-reframe-the-future-of-advice-if-todays-client-is-changing

https://langcatfinancial.co.uk/wp-content/uploads/2023/05/The-Advice-Gap-Report-2023.pdf

Rise in IFA retirement a ‘huge’ opportunity for younger advisers (professionaladviser.com)