This article has been written by The Lang Cat
As a key part of this year’s market study State of the Advice Nation (SOTAN wave seven), our qualitative and quantitative research homed in on advice professionals who own their business. This offers unique insight into what a cohort of 240+ business owner respondents are currently thinking about, what gives them confidence about the future, and what difficulties they’re wrestling with as they strive to build profitability and grow their firm.
It’s looking positive for turnover, with 80% of firms reporting this is going up, and over half predict revenue growth in double digits. Profitability too is promising – two-thirds of owners expect increased profits, 50% higher than the number of firms stating this last year. As a marker of continuity and potential intergenerational wealth transfer, 38% of firms’ clients have family members also receiving advice.
On the other side of the coin, many business owners say the number one issue causing anxiety is incessant regulatory change. More on this in a moment.
Digging deeper into revenue and profitability, the generally bullish sentiments of firms’ owners represent the most positive outlook detected in these annual studies since 2021, the time when advised clients’ money held back by the pandemic surged back into investments amid rising markets. Moreover, this positivity has arisen despite the hefty efforts being expended by firms to comply with Consumer Duty, and the negative reaction to some elements of the new Chancellor’s first Budget. It seems “the rising tide of positive market performance has floated most boats, as was the case in 2021”.
As the field study was carried out in late 2024, amid the perturbations of the Autumn Budget, it’s worth acknowledging that since the start of 2025 the multiple ups and downs in global markets. However, there’s no sign that the positive perspective among business owners is diminished. Indeed, this outlook has surely been bolstered by the FCA’s recently released Financial Lives survey, which reports that a massive 85% of advised clients say they trust their financial adviser. This good news for the profession is corroborated by other lang cat research peering into the advice gap.
The downward direction of interest rates is also likely to add to the air of positivity. With banked cash attracting lower returns, a resurgence of advised clients’ money flowing back into investments in step with financial plans will enhance firms’ bottom line.
As for the ‘awake at night’ concerns among SOTAN’s business owning respondents, regulatory change and compliance is rated the uppermost worry, with pressures coming both from regulation already in force and what’s coming down the pipe. The general feeling is frustration with the FCA for continually bringing in more regs, making it harder and harder to stay on top of this. Regulatory obstacles when onboarding new clients is also seen as hampering growth. These issues particular irk smaller firms, without the benefit of compliance specialists on the team.
On that note, the second greatest anxiety identified in the study is having enough staff and resource to operate productively. Firms indicate they are running at capacity, and finding it difficult to locate high quality people to help resolve current needs and higher workloads. Meanwhile, retaining existing staff is also a challenge in a seller’s market for skilled advice practitioners. Clearly, the perennial problem remains of attracting new talent into the profession, which is as much a societal issue as something to be fixed by advice firms’ actions.
Interestingly, in a market populated overwhelmingly by firms with five or fewer advice practitioners, this year’s study found a significant increase in business owners closest to retirement expecting to sell up to a consolidator in future. Over 25% of this cluster foresee selling to a consolidator as the most likely exit route, up from around 20% the previous year. On the other hand, most business owners believe they will remain running their business five years from now. This bodes well for those capitalising on the pending ‘great wealth transfer’ passing down advised families.
All told, there’s plenty of confidence out there that advice businesses smaller and larger will continue to thrive, despite the regulatory burdens and our new era of market volatility.
Key Risks
This article is issued by Liontrust Investment Partners LLP (2 Savoy Court, London WC2R 0EZ), authorised and regulated in the UK by the Financial Conduct Authority (FRN 518552) to undertake regulated investment business.
This information and analysis is believed to be accurate at the time of publication, but is subject to change without notice. Whilst care has been taken in compiling the content, no representation or warranty is given, whether express or implied, by Liontrust as to its accuracy or completeness, including for external sources (which may have been used) which have not been verified.
Disclaimer
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