Financial advice firms are feeling positive about the state of the sector, with 80 per cent reporting an increase in turnover in 2024, The Lang Cat’s latest State of the Advice Nation report has found.

This positivity was further evidenced as more than two-thirds (68 per cent) expected higher profits in the year ahead, an increase from 42 per cent last year and the most positive outlook since 2021.

Low energy

However, while most firms had a successful year, The Lang Cat found that energy levels across the profession were low.

Fears of further regulation was the most common concern among advice firm owners, with 31 per cent of respondents stating that this was the issue that kept them awake at night.

The second most commonly cited worry was staffing and finding the right people to join their businesses (15 per cent), followed by growing their firms (13 per cent) and having enough time (8 per cent).

Consumer Duty

The Lang Cat highlighted a “clear frustration” over what advice firms feel is a lack of progress spanning all the Consumer Duty outcomes.

More than one in five (21 per cent) rated Consumer Duty progress overall as a ‘waste of time’ and nothing had changed, while 69 per cent believed there had been ‘some improvement’, 9 per cent said there was ‘noticeable improvement’, and no respondents felt there had been ‘transformational change’.

Almost half (43 per cent) felt the Customer Support outcome was a waste of time, with The Lang Cat stating that the findings reflected a growing feeling that the regulation had not delivered the positive change intended or had an impact in the right places.

Nearly a third (29 per cent) stated that provider inefficiencies presented the biggest challenge to their work, with many emphasising the need for real provider support on key issues such as pension transfers and Letters of Authority.

Consolidation and newcomers

Consolidation activity continued at pace in 2024, as more than 30 firms were actively acquiring businesses nationwide.

Around one in seven (15 per cent) of advisory firm owners expected to sell to a consolidator within the next five years, rising to more than one in four for those nearing retirement.

When looking at those new to the profession, 41 per cent joined the sector as an opportunity to help people, while 31.5 per cent did so for the clear career path, and 31 per cent had an interest in the subject itself.

However, when asked about any unpleasant surprises since starting work, 62 per cent cited the regulation and bureaucracy to contend with, and the amount of paperwork still used (65 per cent).

“With State of the Advice Nation in its seventh year, we now have the most comprehensive data set ever,” commented The Lang Cat insights director, Steven Nelson.

“We’ve had a 25 per cent jump in response rates compared to last year and it’s incredibly encouraging to see more paraplanners and newcomers to the advice profession participating, enabling us to capture voices from right across the profession.

“While the industry outlook is positive, the growing burden of regulation is clearly taking its toll, as well as managing the day-to-day demands of running a successful and profitable business.

“But firms are open to regulation having a meaningful impact in the right areas, with the majority looking for a more proportionate approach that they believe could positively affect client service or fee levels.”

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