The Growth Imperative for Advisory Firms

I don’t quite know how to say this nicely, and I loathe being the Debbie Downer at the start of what should be a fabulous year, but here’s the brutal truth: the business of financial advice has a growth problem.

At first glance, the FCA’s latest RMAR data might tell a different story. Total retail investment advice revenue grew from £2.8bn in 2014 to £5.3bn in 2023—an average annual growth rate of 6.71%. Sounds promising, right? Until you dig deeper.

A closer look reveals much of this growth happened in the earlier years, with an impressive 9.63% annual growth rate between 2014 and 2018. But the last five years (2019–2023) have been a different story, with growth slowing to a meagre 3.74% per year. Adjust for inflation, and the picture becomes downright grim: an annual decline of -2.16% in real terms, or a cumulative drop of -10.35%. And if you exclude the market bump—particularly the COVID recovery—real-term revenue would have plummeted by a gut-wrenching 36%.

Declining Adviser Productivity?

Another way to think about this is to look at adviser productivity. RMAR data shows average retail investment revenue per adviser declined in 2023, despite the 10% growth experienced by a typical 60/40 portfolio. Extending to the past five years and adjusting for inflation, average productivity per adviser declined in real terms by around 13% in the past 5 years, compared to the 40% cumulative real term growth between 2013 and 2018!

Solo advisers appear to have seen a much bigger impact, with a real productivity decline of about 16% in the past 5 years, compared to an impressive 60% in the 5 years prior!

The Million Pound Question

Here’s the burning question: if financial advice is such a powerful force for good, helping people live their best lives, why has its organic growth been stunted in the UK over the past few years?

It wasn’t always like this. The first five or six years after RDR saw meaningful growth in financial advice across the UK, a time when the profession felt buoyant and buzzing with potential. But lately? The tide seems to have turned. Sure, there are pockets of growth if you squint hard enough, but the overall picture is about as inspiring as a grey Tuesday morning in February.

Before jumping on the usual soapbox about demand-side issues like consumer trust and the advice gap, let’s take a closer look at the numbers. Only 8% of UK adults currently access financial advice, yet over 35% of UK households hold a net worth exceeding £500k, and 25% exceed £750k. Even if we strip out property and physical assets, 25% of households have more than £300k in financial and pension assets.

The takeaway? This isn’t a demand problem. There’s a cavernous gap between those who could benefit from financial advice and those who actually receive it. In fact, even if the sector doubled in size overnight, we’d barely begin to scratch the surface of the potential market.

Growth Blockers 

Having spoken to many advisers over the past few months, a clear theme has emerged: growth has been more challenging in recent years, and not for lack of trying. When pressed for reasons, advisers generally point to a handful of culprits that are holding them back.

1. Regulatory Burden: The relentless deluge of regulatory demands has left many advisory firms feeling like they’re running on a treadmill: expending huge amounts of energy but never really moving forward. It’s not that advisers are strangers to regulatory change—they’ve shown resilience and adaptability in the wake of RDR, Pension Freedoms, and other reforms during the more optimistic years leading up to 2018. They not only survived but thrived, riding a wave of growth.
   
   More recently, though, it feels like we’ve hit a tipping point—let’s call it “peak regulatory coping.” Time and effort that could be spent winning new clients or building stronger relationships with existing ones is now diverted to compliance. It’s an exhausting balancing act, with advisers juggling mountains of paperwork, policy updates, and regulatory frameworks.
   
   The scrutiny around ongoing fees has added another layer of complexity, leading to price compression. Advisers are being forced to turn away clients they can no longer serve profitably. It’s a bit like trying to play chess while someone keeps changing the rules—except the stakes are your livelihood, and the game never seems to end.
   
   
2. Operational and Administrative Overload: Most advice firms run on a tech stack that’s creaking at the seams. The average firm is battling operational overload, thanks to fragmented and clunky systems, cobbled together in a world that no longer exists. It takes, on average, 40 hours to onboard a new client and  10 hours to deliver annual planning. It’s no wonder firms feel like they’re spinning plates rather than driving growth.
   
   
3. The Knowhow and Capacity Wall: Here’s the thing: many advisers didn’t set out to become business owners. As one particularly wise adviser put it, “We’re accidental or reluctant business owners.” The skills that make for a brilliant financial planner—empathy, technical expertise, and relationship-building—don’t necessarily translate into the skills needed to run a thriving business. Strategy, operational excellence, sales and marketing, hiring and firing, team-building, and leadership? None of these are part of the financial planning curriculum. Most advisers are left to stumble through, learning by trial and error. But each stage of a business lifecycle requires a different dimension of expertise. Growing to £2m revenue takes a very different skillset and mindset than growing to £500k. That’s why programs like Brett Davidson’s Uncover Your Business Potential have been game-changers for so many firms. They provide the tools and frameworks advisers need to step into their roles as business leaders, beyond financial planning.
   
   
4. The Drive Factor:  There’s a narrative out there that the average adviser is 56 years old and simply running down the clock to retirement. Supposedly, they’re in “wind-down” mode, not “growth” mode. Now, I don’t particularly like this sweeping generalisation, but that doesn’t mean it’s not worth addressing. Personal motivation matters, and it’s a critical factor in whether a business decides to embrace growth or just coast along. 
   
   The result of all this is sadly a profession that’s bogged down in the minutiae, with too little time or energy left to focus on the big picture: delivering outstanding advice and growing the reach of financial planning in the UK. 

Why Growth Matters for Advisory Firms

Does it even matter if adviser firms grow? Spoiler alert: yes, it really does. 

I’ll be upfront—I’ve staked my career on this mighty profession, so of course, I’m keen to see it thrive. More importantly, growth is critical for every single stakeholder in this industry. Advice business owners, advisers, paraplanners, administrators—everyone working tirelessly behind the scenes—all need growth to keep their firms vibrant and sustainable.

Businesses that grow are better equipped to invest in their teams, retaining top talent and ensuring they’re rewarded for their contributions. And happy, engaged teams? Well, they deliver outstanding client outcomes. It’s a virtuous cycle.

Growth is a win for clients, too. High growth firms can reinvest to broaden and deepen their services, creating more value for their clients. They’re also better positioned to weather industry-specific pressures and the inevitable economic storms. A stagnant business, on the other hand, risks being caught in a downward spiral, where everyone—clients and employees alike—ends up shortchanged.

There’s an old maxim that rings truer than ever: there are growing businesses, and there are dying businesses. Growth is to a business what oxygen is to life. You can hold your breath for a while, but sooner or later, you’ll find yourself gasping for air. And let’s face it, no one dreams of running a business that’s on life support.

If culinary analogies are your thing, think of it like baking bread. Without yeast (growth), all you get is a sad, flat loaf—not the kind of thing you proudly display at the family dinner table. Growth is what gives a business its lift, its energy, its capacity to evolve and thrive in a fast-paced world. It’s what turns a decent business into a great one, ensuring everyone involved can flourish rather than simply scrape by.

So, yes, growth matters—immensely. For your team, your clients and the indeed wider economy.

Reigniting Growth in 2025

We could spend endless hours unpacking growth blockers and daydreaming about how wonderful it would be for financial advice to resume the buoyancy it once experienced in the wake of RDR, but the real question is: What are we going to do next?

The good news is that with so much unmet demand in the UK market, the opportunity for growth is as ripe as ever. This isn’t the time for the advice firms to sit in their comfort zone; it’s time to break free and step into the next chapter of growth and innovation.

That’s exactly why Brett Davidson and I are hitting the road for the Supercharge Growth Series across six UK cities in January and February. Together, we’ll dive deep into the key drivers behind high-performance advisory firms: strategy, people, and technology. You’ll leave with actionable insights on how to find ways to streamline operations, regain focus on client outcomes and create a business that’s not just profitable, but joyful to run.

With the right strategies in place, 2025 could be the year your financial planning business finally steps up to meet its full potential.