Today we have published an update to our Financial Adviser Business Benchmarks report that we do each year with the Personal Finance Society (PFS). It’s packed with useful information for financial planners and financial advice business owners. It’s based on a survey of 365 PFS members between 31 July and 12 August and is the largest of its kind since the easing of lockdown.

Headline findings:

  • Gross revenues decline for three quarters of financial planners due to Covid-19
  • Business growth depends on operational efficiency, but only 30% of firms have mapped processes to identify bottlenecks

Gross revenues down, new business is picking up

75% of financial planners have experienced a negative impact on gross revenues due to Covid-19, with a fifth forecasting a decline of at least 20%. Small firms, with 2 – 5 employees were hit hardest: 83% of small firms report a decline in gross revenue. While a decline in new business is to blame, 44% of financial planners say that new client enquiries are picking up.

Despite this decline in gross revenues, financial planners report that customer numbers are up year on year: 45% of financial planners say they are working with more clients this year than last. Only 5% of financial planners have seen client numbers decline year on year.

My take on this is that financial planners adapted quickly to remote working but the inability to meet prospects face to face has taken its toll on financial advice businesses. All indicators point to a rapid recovery with new client enquiries picking up again as lockdown measures have eased. We often talk about the importance of technology to enable financial advice. Tech undoubtedly supports the advice process. But financial planning relationships still rely heavily on an initial trust-building meeting and this is still best done face to face. 

Commenting on the research, Keith Richards, chief executive of the Personal Finance Society said “This has been a challenging year for advisers, with the market turbulence earlier in the year and reduced opportunities to talk to clients face-to-face. We continue to work with the FCA to make sure that the regulatory burden, especially certain MiFID rules, continue to be eased or deferred as much as possible to allow the profession to focus on the needs of their clients and business.”

Financial advice businesses fail to drive efficiencies through internal process mapping and analysis

Faced with shrinking margins, financial advice businesses need to do more with existing resources. But 39% of firms have not taken the basic step of listing out all of the tasks, contacts and events that should occur at each step in the process of creating and delivering a financial plan and only 30% have analysed their workflows to identify bottlenecks.

The research reveals that financial advice businesses spend an average of 39 hours with a new client in the first year of a relationship. Faced with shrinking margins, financial advice businesses need to do more with existing resources. Huge benefits can be derived from mapping workflows and identifying bottlenecks. Ensuring the process is as efficient as possible, and that the right representatives in the firm are doing the work, will allow financial advice businesses to grow and scale.

Keith Richards, chief executive of PFS commented: “It is startling to see how much time is still spent gathering information compared to talking to clients, although some firms have realised that advance completion of documents or fact finds by the client can offer both efficiencies and greater involvement. We are also seeing a rising demand for ‘soft’ skills training, such as positioning and conversational skills. It is in these areas that advisers can really learn about their client, and demonstrate the value that they are giving, so it’s not surprising that advisers want to spend more of their time talking to clients.”

Number of female planners continues to rise as does the number of Chartered firms

The research also reveals a changing profile of financial planners. While 28% of financial planners under the age of 44 are female, this compares to only 10% for those aged 55 and above.

Improved professionalism and high standards within the industry also shone through in the research. There has been a 6% increase in firms awarded Chartered status in the past year. 32% of firms have now been awarded Chartered status with a further 16% working towards it. More than half have achieved Level 6 (i.e. CII advanced diploma & CISI certificate in advanced financial planning), with Level 7 qualification being the ultimate qualification held by 16%.

To participate in research studies like this in future, we ask employees of financial advice and paraplanning businesses to sign up to our research panel

The full report can be downloaded here:


About the Author

Heather is a data and research expert specialising in retail investment distribution. Heather is the Managing Director and Founder of NextWealth. She is also a Director of Clive Waller Consulting Ltd and serves as Vice-Chair of The Investment Network and the Schroders UK Platform Awards.