The financial planning profession is at a crossroads. For decades, the old-school model dominated—a system where financial planners often doubled as financial advisers, wearing two hats. These professionals combined strategic financial planning with product-driven advice, often charging fees as a percentage of assets under management (AUM). However, cracks are forming in this model, and new trends are paving the way for a transformative approach to financial services.
The Shift to Separate Roles: A New Paradigm
The modern financial planning model challenges the dual-role approach, advocating for a clear divide between planning and advice. In this emerging framework, professionals specialise, either as pure financial planners—offering strategic, holistic guidance—or as advisers focused on investment products. This shift is fuelled by changing consumer preferences, evolving regulations, and economic pressures.
Why does this matter? It brings clarity, transparency, and focus to each role, ensuring that clients receive value-driven, conflict-free services tailored to their specific needs. The separation also aligns with regulatory expectations like Consumer Duty, which emphasises fair value, clear communication, and enhanced customer outcomes.
Trends in the Old Model: Why It’s Losing Ground
Despite its long-standing presence, the old paradigm is showing signs of strain. Let’s explore some key trends:
- Rising Fees Amid Regulatory Pressure
According to recent surveys, advisers charging higher ongoing fees have increased. For instance, the proportion of advisers charging between 0.75% and 1% has risen from 34% to 37% in the past year. This isn’t just inflation—it’s indicative of firms positioning themselves for potential exits. Higher fees can boost firm valuations in a market where recurring revenue plays a significant role in sale prices.However, under new Consumer Duty regulations, firms must justify these fees with added value. This places pressure on advisers to enhance their services—offering more client reviews, personalised advice, or additional support. - Ageing Client Profiles
The old-school model tends to attract ageing “delegator” clients, particularly Baby Boomers, who prefer to entrust their financial affairs to professionals. Conversely, younger generations like Gen Z and Millennials lean towards self-directed solutions and digital platforms, favouring autonomy over delegation. - Increasing Asset Thresholds
Faced with rising operational costs from compliance, regulation, and professional indemnity insurance, old-model firms are setting higher investable asset thresholds. This means they’re prioritising wealthier clients, often requiring £200,000 or more in investable assets. While this boosts revenue per client, it risks alienating younger or less affluent clients who could benefit from financial guidance.
Where Does This Leave Financial Advisers?
The traditional financial advice market is under pressure. With growing regulation and an ageing client base, advisers must decide whether to adapt or risk obsolescence. Firms clinging to outdated models may find themselves struggling to attract new clients or comply with regulatory demands.
A Brighter Future: Embracing the New Paradigm
The separation of financial planning and advice isn’t just a regulatory response—it’s an opportunity. By specialising, professionals can:
- Focus on What They Do Best: Planners provide holistic life planning, while advisers excel in investment management.
- Meet Diverse Consumer Needs: Serve both delegators and the growing self-directed market.
- Drive Better Outcomes: Offer value-driven services that align with individual goals, lifestyles, and values.
Why Now is the Time to Act
For financial professionals, adapting to the new model means embracing transparency, innovation, and client-centric practices. For consumers, it signals a move towards services that are accessible, ethical, and tailored.
At the Academy of Life Planning, we champion this transformation. Whether you’re a professional looking to pivot your career or an individual seeking to take control of your finances, we’re here to guide you every step of the way.
The financial landscape is changing—will you change with it? Let’s build a brighter, fairer, and more inclusive future together.
This article serves as a call to action, encouraging reflection and engagement with the new paradigm. If you’d like to explore this topic further or align your services with the future of financial planning, get in touch today!
Q&A: Understanding the Shift in Financial Planning
Q: What is the old-school financial planning model?
The old-school model refers to financial professionals who wear two hats: financial planning and financial advice. They not only create strategies for clients but also recommend and manage investment products, often charging fees as a percentage of assets under management (AUM). This dual role blends strategic planning with sales and investment advice.
Q: Why is this model changing?
The financial world is evolving, and so are client needs and regulatory expectations. Clients are demanding clearer, more transparent services tailored to their goals. At the same time, regulations like Consumer Duty are pushing firms to demonstrate fair value and improved outcomes for clients. These shifts are encouraging a separation of roles—where professionals specialise in either financial planning or financial advice—to ensure a more focused and client-centred approach.
Q: What does the new model look like?
In the new model, there’s a clear distinction between financial planning and financial advice. Financial planners focus on the big picture—helping clients create a roadmap for their financial and life goals. Financial advisers, on the other hand, concentrate on managing investment products. By separating these roles, clients gain more transparency, specialisation, and trust in the services they receive.
Q: Why are advisers raising their fees?
Advisers charging fees based on AUM are increasing their rates for several reasons. Higher fees can enhance firm valuations, particularly for those preparing to sell their business. Additionally, rising operational costs from regulation, compliance, and professional indemnity insurance mean firms need to charge more to maintain profitability. However, these higher fees must be supported by added value under Consumer Duty regulations.
Q: How are client demographics changing?
The old-school model primarily attracts Baby Boomer clients—often ageing delegators who prefer to leave financial decisions in the hands of professionals. Meanwhile, younger generations, such as Gen Z and Millennials, are opting for self-directed financial solutions. These clients value digital tools, autonomy, and cost-effectiveness over traditional adviser relationships.
Q: What about minimum asset thresholds?
Old-model firms are raising their minimum investable asset thresholds to prioritise wealthier clients. For example, a growing number of advisers now require clients to have £200,000 or more in assets to qualify for their services. This trend is driven by a need to maximise revenue per client while managing increasing operational costs.
Q: How can professionals adapt to the new paradigm?
Professionals can thrive in the new model by embracing specialisation and focusing on value. By choosing to become either a dedicated financial planner or a financial adviser, they can align their services with client needs and regulatory demands. It’s also essential to explore alternative fee structures and adopt technology to cater to a broader range of clients, including younger, self-directed individuals.
Q: How does the new model benefit clients?
The new model empowers clients by offering clarity and choice. They can work with specialists who provide tailored advice, free from conflicts of interest. This approach also ensures services are more accessible, transparent, and aligned with individual values and goals.
Q: What is the Academy of Life Planning’s role in this transformation?
The Academy of Life Planning is at the forefront of this change. We guide professionals through the transition, helping them align their practices with the future of financial planning. Whether you’re a financial planner looking to specialise or a consumer seeking self-directed solutions, we provide the tools, resources, and support you need to succeed.
Q: How can I get started?
If you’re ready to embrace the new paradigm, we’re here to help. Reach out to the Academy of Life Planning to learn how you can adapt your practice or take control of your financial future. Together, we can create a fairer, more inclusive financial landscape. Get in touch today!
Academy of Life Planning 